Ms Derville Rowland:

The provisions the banks have made to date on the tracker mortgage examination are in the region of €1 billion, which includes the redress and compensation they are quite rightly paying to their customers as well as the costs because they had to dedicate much of their resources to obtaining external support and assistance.

On the culture of the banks, the committee will know we wrote a cultural report last year and demanded that the banks give us a credible plan to address the cultural deficits we saw. We have been particularly focused on risk and Mr. Sibley might speak on the wider risk considerations because they are important. There are risks the banks pose to their consumers through their consumer culture and attitudes. We approached the banks' boards to discuss our expectations and get a feel for their views and for how committed we thought they were to addressing the matter properly. Culture cannot be changed overnight. I heard a wonderful phrase that compared it to a lifestyle change rather than a New Year's resolution. If one is truly committed to changing the culture, there must be a serious programme, spanning a number of years, on the most important areas of focus . We found that the banks had only recently developed a true consumer focus and that there were significant deficits in some of their leadership and their degree of optimism because they had emerged from a crisis and might have had an unrealistic view of what they faced in the future.

We put the expert team back together more recently. Our Dutch colleagues, who are world leaders in cultural assessment, returned to work with our prudential and conduct colleagues, who met to consider the plans they had submitted to us on how they would approach the issue. We evaluated those plans, some of which we are pleased with. We believe that if they implement those proposals with vigour, it will be a good outcome. On the other hand, we were disappointed with some of the plans because we thought they reflected too much optimism and lacked the detail we expect to see. In future, from both a prudential and conduct perspective, the plans will be a priority for us. We will meet the CEOs of the banks again to give them our feedback on the quality of those plans and, as we roll out the different parts of our supervisory exercises, we will examine what we consider to be the most important transmission points for cultural risk to consumers, such as the sales channels and incentives. When we examine products and demand they demonstrate to us the groups to whom their products should be sold, for whom they are suitable and for whom they should confer a benefit, we check that against whom they actually sell to, which should tell us all we need to know about a consumer-focused culture because customers should be able to gain an appreciable benefit from the products they buy in the medium and long terms.

We want to see that kind of approach and, as a result, we have strengthened our approach to consumer protection and are becoming firmer and more specific. It is a continuous part of what we expect but, ultimately, culture is something the firms must change and is the responsibility of the board to lead on. We need to see that transmitted through the pressed middle to the front-line staff, who need to be supported by their leaders in delivering the consumer focus we expect to see. It is a journey on which we will need to see the banks' demonstrable commitment over a matter of years rather than being a flash in the pan that they can speak about the following year after it goes away. We will demand that from them.