Ms Derville Rowland:

I can add to that in more specific ways if the committee wishes. When this issue arose, the framework of the examination was developed in the context of the enforcement investigation into Springboard Mortgages limited and Permanent TSB, which the members will be familiar with. It emerged in that way. As we were going through the investigation, it crystallised for us that the tracker matter would have a very severe effect on people if we looked at the consequential impact downstream. As the investigation progressed, we have seen loss of home ownership, loss of buy-to-let properties and all of the devastation that has wrought on people, particularly in the context of the recession which everybody was living in.

We are, as the committee will know, the systemic regulator and we have many powers. Since 2010 and the reform of the Central Bank after the crisis, there has been significant amplification of our powers. I want to be very clear about that. We have used the powers given to us under section 22 of the Central Bank (Supervision and Enforcement) Act 2013 for information-gathering purposes. We have extensive powers to require, on deadline and demand, the provision of specific documents and information. We used that power when carrying out the first phase of the reports, when we demanded information to scope out and plan this enormous exercise. We are talking about more than 2 million accounts and a great volume of information has to be acquired. I am sure that every member of the committee understands that we would be here for decades if we had to deal with 2 million accounts on a case-by-case basis. We had to come up with a structure which would move us through such a large-scale piece of work in an intelligent way which would be constructed to cut through the data, but which had strong degrees of assurance drilled in. The section 22 powers have therefore been used to good effect to meet the deadlines. The deadlines for the first phase have been met and, contrary to what may have been said in other appearances before the committee, all the deadlines imposed for the second phase have also been met. As an aside, we were not necessarily happy with the content of what was provided and some lenders have been told to go back and do better.

We are now coming to the third and fourth phases. In plain terms, it was our view that having an impact on people at the tail-end of the process would be going about it the wrong way around. The most important thing was to deal with the detriment imposed on people. The first thing we did in that space was to put out a signal and a requirement that no repossessions were to occur until there was a totally gated procedure to ensure that the cases in question were not contaminated by this difficulty. The second thing we did was to get the lawyers together so that we could confer in respect of what we thought fair and reasonable tortious principles to assist people might look like. We knew that this was outside the strict scope of our powers but, looking at the scale of this problem, we thought it might offer a reasonable, quick, upfront payment alternative in addition to the normal infrastructure the State has to deal with such issues. As the committee well knows, recourse to the FSO is available on a case-by-case basis after complaints have been dealt with through the lending institutions. That is the normal course. For the more serious matters, cases may progress to the courts. Since we were dealing with such scale, we thought that this additional option of compensation, which is not a typical power for a systemic regulator to even wish for or seek, might be useful in this case.

We also demanded that any limitation period arguments would be held in abeyance by the lenders. Very importantly, we could not look at everything on a case-by-case basis or we would be here for decades but we stood firm about the quality of the scheme and having a good appeal mechanism in place so people could bring personal information forward before independent arbiters would assist. That is a very important part of the framework. We have moved into an unusual space.

There is a statutory power in the 2013 Act to order redress. However, that power is prospective and does not capture the harm that has accrued in this instance because most of said harm predated the creation of that power. In fact, what has happened in a regulatory context was that when the supervisors in consumer protection became aware of these issues, they actually moved to close the gaps and strengthen the provisions in the codes. This is one of the main reasons it cuts off at an earlier period.

What we are doing is pursuing enforcement investigations in detailed, forensic ways. There is a full suite of enforcement powers. The committee may be aware there have been five significant court litigations challenging the constitutionality of the powers. There have been many judicial reviews all the way to the Court of Appeal. We have successfully defended the right of the Central Bank to use its enforcement infrastructure to support proper and effective regulation. However, none of this delivers an answer to individuals sooner rather than later. It is for this reason that we thought this was a good additional option. From a conceptual perspective - let us forget the law for a moment because it is a tool to be pressed into use when necessary - this is an opportunity for lenders to show that they are different culturally to what was the case during the crisis and that consumer protection is something they can proactively consider. They can also show, in instances where they have caused harm, that they can take the burden off the individual, on a voluntary basis, and afford him or her reasonable redress and compensation. This will allow lenders to demonstrate that they are capable and able to put consumer protection at the heart of their consideration and just do the right thing.

We have moved into this space, which is unusual. It is the result of a timing issue; it brings the monetary sums upfront. This may not be a complete answer to the harm that has been done to people, but it is something and it is better than letting the matter pass. We have taken the time to challenge them and it has taken longer for people, which I fully accept. However, I think it is worth it because to come to us with proposals of no appeal is utterly unacceptable given that decision-making about appeals is the point at which the nuances will be heard. It is really very important. To deny the fact there is consequential impact is just not acceptable. As we move in to look at this under our authorised officer powers, we will find more disagreement and we will commit to using those powers. This has already started with one of the lenders. We are demanding that the two with which we are not happy - we will find we are not happy with more - to come back and answer us. We have imposed deadlines in this regard. We believe that the disagreement has probably reached the stage with some of them whereby there is no point in continuing an inconclusive conversation any more.

If people are left out of the scope and we think they should be included, we do not have the power to deliver them into the compensation and redress scheme on a voluntary basis because the decision lies with the lender and not with us. What we do have is the power to direct a lending institution to identify, by name, the specific individuals about whom we are concerned and to notify them in writing of its decision not to include them and to tell them of their right of redress to the FSO and to the court. The reason we need this to be done is so people are on specific notice of their rights and can assert them. In this context, we have been in touch with the FSO to discuss the very welcome amendment to the limitation period, which enables cases to be brought in a longer time span and that is not a difficulty. This is very welcome, and the ombudsman also sees the benefit of the normal infrastructure working. If this happened today - I hope it will not but, in the context of financial services across the globe, consumer protection issues do arise - a key feature of the system is to be able to fix those problems. We have redress powers. We do not have compensation powers, which are different, but one would think that is usually a matter for the courts because of the specific consideration, but we do have redress powers that would apply today so we would be in a somewhat different position. I hope this is of assistance.