Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

We saw increasing resolve in Europe when the Parliament named us as a tax haven for the first time. It is a global issue but many of our partners in Europe are not on the list. My concern is that certain member states have an agenda in the area of tax sovereignty and harmonisation and these headlines do nothing for our case to resist that agenda. There are real issues that need to be tidied up.

The prevailing rate has been discussed in some detail, particularly by Deputy Michael McGrath who raised it at last year's meeting.

The Governor is coming to the end of his term and this is the sting in the tail. I genuinely believe the Central Bank has got this very wrong. I cannot for the life of me understand how it has allowed the banks to engineer a rate that did not exist. I refer to where there is ambiguity in the contract. Ms Rowland, Professor Lane and Mr. Sibley all mentioned ambiguity in the contract. If there is ambiguity in the contract, one must operate in favour of the borrower, as stated in law. That is very clear. For the Central Bank to say the prevailing rate at the time in question did not exist because the product did not exist will not stand up to legal challenge. This will be challenged in court.

I note the report the Central Bank gave this committee in which it states this issue was tested legally by it. I understand it was not a unanimous view and that there was not a case here that could be presented. I may be mistaken in that regard. I am concerned about requiring 6,000 customers to go through an appeals process. Some will not bother doing so.

Ms Rowland talked about the Central Bank’s track record. Its track record in recent years has been good, apart from in respect of a number of small issues, the one in question being an example. The Central Bank was asleep at the wheel for a long time before recent years. A considerable amount of money was taken from people although the Central Bank's role is consumer protection.

One of the key moments was the case of Irish Life and Permanent plc v. Financial Services Ombudsman and others, heard by Mr. Justice Hogan. The defence put up by Permanent TSB at the time was that the contract was broken. Mr. Justice Hogan was very clear in his deliberations and findings. He made it clear that if a key clause of this kind is to bear sophisticated construction, it behoves the bank to spell this out in plain language for the benefit of the customer. AIB provided this committee with the contracts. They are standard contracts. They are ambiguous. They refer to a prevailing rate that does not exist. They outline the rate in Part 1 and in a different part outline that the tracker rate is set out in Part 1. It is, at the least, ambiguous. Therefore, there is a failure to outline the rate clearly. What it indicates is an intention to apply a rate applicable to the market conditions of the time but that is not what is in the contract. A clause refers to the prevailing rate and a later clause stipulates it is set out in Part 1.

Based on legal premises, the Central Bank has got this wrong. If there is ambiguity in the contract, which there clearly is, it should never be the bank that benefits. Ms Rowland will know this better than I do. It has to be the borrower. By not taking this case, the Central Bank is really failing the customers concerned. What is happening is not right for individuals who will take this case. I hope they win. I am confident about this. Much legal opinion has been sought from very eminent individuals in regard to this matter and it indicates it should not be the banks that benefit. The elephant in the room is consumer protection under the Central Bank.

I have listened to Professor Lane and I respect him and the job he does but the Bill sponsored by Deputy Moran was regarded as no good, the idea that there should be no sale to the vultures without consent was regarded as no good, and Deputy Michael McGrath’s Bill about capping interest rates was regarded as no good. The Central Bank was also critical of the proposal on the regulation of the funds. There are four items of legislation on consumer protection - one already in law, one from the Government and one from me - but the Central Bank stands foursquare against them. It stands in the corner of the banks and the vulture funds. This points to the main contradiction. The Central Bank has the dual role of protecting the interest of the banks and, supposedly at the same time, protecting the interests of the public. That is best shown in the ten years of the tracker mortgage scandal.