Oireachtas Joint and Select Committees
Thursday, 12 October 2017
Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach
Banking Sector in Ireland (Resumed): Customer Experience
9:30 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I welcome Mr. Padraic Kissane, financial adviser, Mr. Thomas Ryan, Ms Helen Grogan, Ms Hazel Melbourne and Ms Niamh Byrne. The arrangement for this meeting is that Mr. Kissane will make an opening statement. After that, there will be a question and answer session and the various witnesses can make their contribution.
Before I ask Mr. Kissane to make his opening statement, I remind witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter, and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make them identifiable.
I call on Mr Kissane to make his opening statement.
Mr. Padraic Kissane:
Good morning, Chairman and members of the committee. I thank the committee for allowing us the opportunity to present the customers' perspective of what this tracker debacle has meant to each of them. These people are reflective of any customer across the lenders of Ireland and what has occurred and, more importantly, the effects it has had on each of them is repeated thousands of times, and I know that because I hear first hand in my office. When I was preparing for this presentation, I thought of the many hundreds of people I have met in my office, and the stories that were told to me. Each story was deeply personal and initially difficult for them to share. I acknowledge how difficult it is for people to open up about their innermost matters. Financial stress has catastrophic effects on individuals and families. It causes issues with health, relationships, well-being, shame and isolation, to mention but a few. It remains hidden until it is revealed in an appeal, as a process. For the customer appeals panel of Permanent TSB to dismiss these matters is bereft of morality and common sense, and shows a profound lack of understanding the of effects of the actions of the bank.
The words that would best describe the four people here today are good, hardworking, decent and, most of all, brave. They are people-customers across all banks affected by this debacle and they have had enough of the waiting, the guessing, the condescending attitude, and the arrogance shown to them by the lenders of this country. Banks' collective lack of empathy and understanding of what they have done to their customers is visible in their displays here in this room, as well as in their communications to the customers. The banks seem to have assumed that their customers would continue to roll over as usual, because of the trust customers had placed in their banks. Well, we have had enough.
We have had enough of "we are looking to do right by our customers”. We have had enough of the hollow apologies. We have had enough of the continual trickery relating to these matters. We have had enough of the attempt to introduce rates that were never a tracker mortgage in the first place. Most of all, we have had enough of banks holding our money, which now does not belong to them.
What standards of good faith and fair dealing are our lenders adhering to? What moral compass do they possess? It seems all have forgotten, and I speak about the lenders, and chosen to overlook the very laws that are in place to prevent something like this from occurring. It is financial abuse on a grand scale, contrived to deceive customers out of their contractual rights. Some 15 banks are involved. Today we have customers from Permanent TSB and Ulster Bank, as I believe this committee should and must hear first hand what the overcharging and this deceit has meant to the lives of these people and their families, and I want to thank the Chairman for co-ordinating this meeting with me.
I am also asking for the committee's help in ensuring that everybody who is entitled is corrected. I am not sure how this will take place. Let me introduce the committee to four brave people who have set aside their privacy to come here today on behalf of their families and also of the many thousands that have been affected by all of the lenders. I will start with Thomas Ryan, a Permanent TSB customer who is appearing here on behalf of himself, his wife Claire, and their children. Mr. Ryan was a Permanent TSB customer for a long time. What happened to this family at the hands of Permanent TSB amounts to financial abuse and goes to the core of what is wrong with this lender and its reluctance to face up to what has occurred. This has had a serious impact on the health both of Mr. Ryan, who suffered a stroke at the age of 47, and of his wife Claire, who had a nervous breakdown in 2015. This is the couple at the heart of the infamous Ryan v. FSO & PTSB legal case. They first challenged the matter with Permanent TSB in 2010 and were rejected. They then raised it with the Financial Services Ombudsman, where it was also rejected, before bravely taking it to the High Court. The High Court's decision raised some alarming issues about this lender and its behaviour and a tape was discovered that had not been made available to the Financial Services Ombudsman. The customer appeals panel, however, rejected their appeal in its entirety. All matters raised were rejected. The couple remain on the wrong interest rate and their fight for proper resolution and restoration of their account to its proper position continues.
Ms. Niamh Byrne is a customer of Ulster Bank. She is a teacher who holds an MSc in Economics. She had a tracker mortgage with Ulster Bank at ECB plus 0.85% and was guaranteed by the wording of the mortgage agreement, the mortgage broker and Ulster Bank's mortgage centre that she would be returned to this rate after a fixed period. She is currently on a standard variable rate with AIB. She is one of the thousands mentioned by Ulster Bank when they were last before this committee. As she did not have a permanent teaching contract during the public service moratorium, she was forced to switch from Ulster Bank to AIB in 2009, when Ulster Bank stonewalled her on the return of her tracker rate. Ms Byrne herself likens this process to financial constructive dismissal. Since 2009 she has worked two nights per week on top of her day job and during the summer in order to meet her bills. She took her case to the Financial Services Ombudsman in 2012 and was initially assured that it would take five months to process. It eventually took more than 24 months, largely due to the prevarications of Ulster Bank. A pyrrhic and valueless victory of €25,000 was awarded but her tracker rate was not returned. What is most alarming with regard to both Ulster Bank and the Financial Services Ombudsman in this case is that I won cases identical to Ms Byrne's in 2011. Despite this, hers was challenged. Her fight continues.
The third case is that of Helen Grogan, who holds a PhD in biology and came back to work in Ireland in 2005, partly to help look after her elderly father. She had a 1% tracker mortgage, initially with EBS, to buy a small terraced house near him. In 2007-08 she set about switching to Permanent TSB for a 0.85% tracker mortgage, discounted for the first year to 0.6% to help reduce the payments on her big mortgage. At the end of the discounted period, Permanent TSB increased the tracker rate to 2.25% above ECB, and also offered a cheaper variable rate which Ms Grogan took in order to lower her costs. The increased payments caused her great distress because it was at time when she had had to go down to a four-day week due to her father's increasing care needs. She took her case to the Financial Services Ombudsman but it found in favour of Permanent TSB, which caused her great distress and hardship. She tried to put this behind her so that she could focus on her father and on her work. It took several years, however, before the emotional distress triggered by the very mention of the word "tracker" subsided. This has recently resurfaced with the Central Bank review, especially due to the length of time it is taking to get an answer to her case. She has been paying a higher interest rate for almost nine years now, something she estimates to have cost her at least €40,000. Ms Grogan has attended Permanent TSB's annual general meeting every year since then to try to get her situation addressed. It has still not been resolved and her fight continues.
The fourth case is that of Hazel Melbourne. She is a customer of Permanent TSB and is here on behalf of herself, her husband and family. In introducing Ms Melbourne, I would like to quote a line from her appeal submission. Permanent TSB had said that it would "adequately compensate" her. "Let me clarify one point to start," Ms Melbourne writes in her submission, "PTSB will NEVER be able to adequately compensate me." Like the Ryan family, Ms Melbourne's family has been charged the incorrect rate on their account since May 2009. This is still ongoing, though we are being told that we are wrong, of course. This couple and their children have suffered severe issues because of what has happened and they continue to be overcharged. This is a very severe case of the financial abuse, as the actions of Permanent TSB have removed the elements of choice and control from the couple's finances. The matter has had a dramatic effect on their well-being. Their appeal was entirely rejected by the customer appeals panel. It should be noted that all claims in the appeal were supported with documentation. This couple are also currently on the wrong rate for their loan account. The difference in the interest costs between their correct tracker rate and the incorrect Permanent TSB rate is in excess of €60,000 over the remaining term. Their fight continues for proper resolution and for the restoration of the account to where it should be.
I will finish these opening remarks by quoting from the then European Community's 1995 directive on unfair terms in consumer contracts. This legislation, which has been in place for more than 20 years, states very clearly that "where there is doubt about the meaning of a term, the interpretation most favourable to the customer shall prevail." I hope that today will be a landmark in terms of creating a comprehensive understanding of what has happened and more importantly of the effects that this has had on individuals and families throughout Ireland. I would now like to pass over to the members to meet these four brave people.
Pearse Doherty (Donegal, Sinn Fein)
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This is the second time that I have seen Mr. Kissane appear before this committee and I thank him for his ongoing fight for justice for tracker mortgage victims. Up to 20,000 people have now been affected by this financial fraud by a number of institutions. I also welcome Ms Grogan, Ms Melbourne, Ms Byrne and Mr. Ryan to the committee. Having spoken to many tracker mortgage victims, I am aware that many will talk in confidence but are reluctant to come forward to speak publicly. This is completely understandable, so I thank the four witnesses for sharing their stories with us.
The last time Mr. Kissane was here, he surprised some of us with what he said about the Central Bank. He asked the committee and everyone affected by this to place a degree of trust in the Central Bank to do its job and to allow it the time to do so. That is understandable and we are obviously carrying out the review. My question now, several months now, is as follows: has Mr. Kissane's confidence in the ability of the Central Bank to hold the banks to account been shaken in any way over the last few months? Could the Central Bank be doing more, and is it keeping up enough pressure on the banks? I am sure that Mr. Kissane has monitored the discussions of this committee. One bank in particular has told us that it will not meet the targets set down by the Central Bank. Other banks have told us that while they know that some of their customers are currently on the wrong tracker rate, they have still not put them back on the right tracker rate. Should and could the Central Bank be doing more here? If so, what should it be doing?
Mr. Padraic Kissane:
My latest meeting with the Central Bank was on Tuesday and it was another very constructive meeting. As far as I can say, and not everything can be said here, I still have confidence in the process. As I said before, I certainly acknowledge that the Central Bank arrived late to the process. Great efforts and great levels of work and of manpower have been put in here. If the banks think that they will not be investigated properly, then they are in for a rude awakening. The Central Bank has this absolutely in its grasp. It will take time, unfortunately, before the banks come with their reports for phase 2 and identify the cohorts involved. It is only then that the Central Bank can go back to the cohorts that it might have begun to identify through the submissions that have been made to it by myself and others. The Deputy asked if I have faith that the Central Bank will carry out the process correctly. I think the process has taken far too long but I put have a lot of faith in the Central Bank for two reasons. Firstly, the Central Bank is our only hope to get this done properly because we certainly cannot rely on the banks to do it. I believe the Central Bank is presenting to this committee on 19 November.
Unfortunately, the Central Bank is legally restricted from being able to say a lot that it would probably like to say in the normal course of events. The powerhouses of the banks have many legal experts and any flaw or mistake made now could detrimentally impact people such as those here today. Therefore, the Central Bank has to be careful in this regard.
Pearse Doherty (Donegal, Sinn Fein)
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I appreciate that. That is the role of the Central Bank and we have our own views on it. I certainly have my views on the Central Bank's role in this scandal and it coming late, and also not acting with the urgency that many people demand. Some of our witnesses today are victims of banks in which the State has a significant shareholding. It is a majority shareholding in AIB and Permanent TSB and a significant shareholding in Bank of Ireland. In previous years, we all witnessed the former Minister for Finance, Deputy Michael Noonan, summoning the banks to his office and telling them off about interest rates and not passing them on. Do the witnesses believe that there is a need for political intervention to ask these banks to get their act together, to get the redress done and get their appeals systems straightened out in order that victims are not victimised all over again?
Mr. Padraic Kissane:
There are a number of areas to address. Any pressure that can come on the banks should be applied. The individuals dealing with this in the banks need to step up to address the matter. It is utterly frustrating that people such as Ms Niamh Byrne have to sit and wait in AIB for somebody else to dictate when and what will happen with regard to redress from Ulster Bank. It is not acceptable for Ulster Bank to leave Ms Byrne waiting and not knowing about the situation. I am not certain that I could design, in response to the question, what should happen next, but it is an enforcement investigation in Ulster Bank and that is important to remember. If other lenders are not in that position at the moment, it could easily move to that area. For the purpose of today, I am not avoiding the question, but it is a very serious question that would need much detail. I have thoughts on it but today is more reflective of what the customers have been through and brings home to the public, the committee, the Central Bank and, most important, to the offenders, namely, the banks, what has occurred and the effects it has had, because that is the part that does not get out.
Pearse Doherty (Donegal, Sinn Fein)
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I appreciate that and think it is very welcome. I am sure all members of this committee would be very familiar with the personal impact. I know people very close to me who are victims of the tracker mortgage scandal. We know the stories, the pain and the hurt that has caused families. It is not just financial pain but other pain too. The question that I am struggling with here is that we had the banks attend the committee in recent weeks and they told us that there are now more victims than they originally estimated, that more people have lost their homes, that some of these people have not been put back onto their tracker rates, that they have missed targets and so on. What do we do about it? If the Central Bank is doing everything that it can and the Government is not going to step in as the major shareholder in a number of the banks, what do we do?
Mr. Padraic Kissane:
If the Central Bank is shy of powers, it can direct rather than accept or receive from the banks. If the timelines are at the behest of what the banks dictate, I do not regard apologies for the thousands who are affected as a reason for the delay. The thousands who are affected highlight what went on and the number of people affected. People set about doing everything within their power to try to meet their payments. If the Central Bank attends the committee and there are areas in which it is clearly lacking, the Houses of the Oireachtas should speed forward whatever legislation and powers need to be provided to enable the Central Bank to dictate to the banks much more if it is not allowed to. I am not certain that it is not allowed to. I have heard about the improvement in powers that were given in 2013. I would see some European directives give the Central Bank much more power than it even understands. Many directives are in place in Europe to prevent this from occurring and they are law and have been adopted in this country.
Pearse Doherty (Donegal, Sinn Fein)
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I will ask Mr. Kissane about the role of the Financial Services Ombudsman, FSO. We have had different key people within that organisation over a period and addressing the type of scandal that Mr. Thomas Ryan mentioned with regard to his own case. Does Mr. Kissane think the Financial Services Ombudsman should deal with certain complaints at this point? There is a stock response from the FSO that as long as this examination is ongoing, then the option of the FSO intervening is shut off for the victims of the tracker mortgage scandal. What is Mr. Kissane's view and does he have clients that raise that issue with him? Our other guests may wish to answer too.
Mr. Padraic Kissane:
There are a couple of issues with the ombudsman. I have improved confidence in the office with the new Financial Services Ombudsman, Mr. Ger Deering. The way complaints were handled previously left much to be desired, to put it bluntly. If a customer made the complaint himself or herself and did not bring the required evidence, as shown in Mr. Thomas Ryan's case and Ms Niamh Byrne's case, how it was presented nearly dictated the result. It is astonishing that the average rate of complaints being upheld was 10% or 12% for tracker complaints, while complaints I sent were upheld at a 75% rate. It seems extraordinary that a process can have such variance simply because I knew what documentation to send in and how. Much has changed in the ombudsman's office, and the issue is that if it continues the complaint on a particular account that is then deemed impacted, there is also an ombudsman's process in the redress process. There is a quirk in the system at the moment, and while one can continue, if one wishes, with the appeal to the ombudsman's office, it could be a duplication of the work to a degree. At this stage, coming to the kernel of the situation, one would be as well off waiting for now. That does not apply to all cases. I just mean it generically.
Pearse Doherty (Donegal, Sinn Fein)
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Mr. Kissane has expressed mistrust, to put it mildly, in the internal appeals process, particularly in Permanent TSB in the past. Does he see any evidence that the banks have changed their position? Will he elaborate to the committee, because he deals with many different victims of the tracker mortgage scandal, about which banks are getting the processes right, putting people back on the proper rate, dealing with proper compensation and doing so speedily? Which banks are not doing so and need to buck up?
Mr. Padraic Kissane:
I will address the appeals process within Permanent TSB, because it is the furthest down the track, to use an appropriate word. I had an uphold ratio of 75% in the Financial Services Ombudsman's office. There are two panels, the customer appeals panel and the independent review panel. The independent review panel is for the serious loss of homes, threatened repossessions and cases with a more severe impact and with a legal issue going on at the same time. Of all of the appeals I have brought to the independent review panel, 100% have been resolved. They have not all been resolved to my satisfaction but they have been resolved. Of all the appeals I have brought to the customer appeals panel, one, through fatigue, accepted her position, and 100% of the rest have been declined. I leave it to the Deputy to make an assumption.
Pearse Doherty (Donegal, Sinn Fein)
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Why is that?
Mr. Padraic Kissane:
I have no idea. I have two affected people here today who were impacted severely. I do not get it. I had a row on the phone yesterday with Permanent TSB. It is astonishing. I have had oral hearings with the panel and discussions with it on the margin issue. Of the three people there, one is independent of Permanent TSB while on the panel but works for Permanent TSB. I ask the committee members to take their own views on my percentages. There is more that I could say but I would rather not.
Pearse Doherty (Donegal, Sinn Fein)
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What was that process like for those of the witnesses who have gone through it after being denied a tracker mortgage, going through the internal appeals process and then being denied?
Ms Hazel Melbourne:
I have written something, if that is okay.
I thank the joint committee for giving me time to speak. As I am quite nervous, I ask it to, please, bear with me. I have three minutes in which to tell it about how Permanent TSB's overcharging for eight years has affected my family. I do not know where to start.
There is one major consequence that I do not want to disclose in public, by which I assume Permanent TSB will be delighted. Committee members are more than welcome to read my statement and I hope they will to find out about the catastrophic effect Permanent TSB's actions have had on us as a family. We have had to change our expectations for our future and not for the good. The consequences we have endured at the hands of Permanent TSB are devastating, heartbreaking and totally unacceptable and it will never be able to compensate us. It has taken a huge part of our lives away from us. For six years we have had no control over our true finances and our destiny and we are still suffering the consequences. To think that month after month we were being overcharged by an extortionate amount, struggling to manage what was left of our finances, blaming ourselves and suffering horrific stress as a couple, and then found out via a letter six years later that it had all been down to a so-called error made by the bank was inconceivable. It still is. We are sick to the pit of our stomachs that all of what we have been through was avoidable. There was no need for our future to have been changed. It feels like Permanent TSB is a giant cartel and that there is nowhere to turn for help as somebody is always compromised by the banks.
Where do the people stand on an issue such as this? We did nothing to deserve this, yet we are still in turmoil in trying to have the matter resolved. Where is the justice for us? We were unsuccessful in our appeal on the basis that we had not shown that the financial and non-financial damage was caused by the bank and that it had not been shown that it was foreseeable or could have been anticipated that we would suffer the non-financial losses claimed as a result of the bank's failure. We need to clarify that there are certain situations where the provision of conclusive evidential proof is impractical and impossible and that it does not mean that the bank is not responsible without it. If one reads our appeal, any human being will acknowledge that each of the issues claimed was undoubtedly caused by the actions of Permanent TSB. I made an important call to Permanent TSB to request that we be switched to a tracker mortgage to help ease our situation at the end of our two-year fixed rate period. I asked for a copy of what had been said during this phone call as proof in my appeal. Permanent TSB informed me that it had no record of the phone call owing to technical issues at the time, yet in the rejection of appeal letter, it is stated we never made contact about our mortgage difficulties. These are more convenient lies. Again, where do we stand on this issue?
I cannot understand how Permanent TSB is allowed to carry out the appeals process. It is only fair that it should be carried out by an non-compromised independent body, if such a body exists. One only has to look at the percentage of successful appeals to realise this. I know that Deputy John McGuinness stated in February that the fair treatment of tracker mortgage debtors was a key policy focus for this committee and that it was looking forward to further engagement on the matter. I am literally begging the committee to help not just my family but everyone out there who has suffered horrifically at the hands of the bank. We need someone to listen to Mr. Kissane and stand up for families like mine who are being bullied by banks and not being given back what is rightfully theirs. We have been through enough. The bank should be forced to restore customers to their correct tracker rate and compensation should then be calculated at the correct margin. That should be done, at the very least.
Mr. Padraic Kissane:
Deputy Pearse Doherty asked who was further down the line. It is important to state AIB has commenced the pilot process with me. I meet the people engaged in the investigation directly. We have already carried out briefings on five cases as a sample set and they were very constructive. They are not easy. The appeal to the independent review panel within Permanent TSB is not easy, but it is correct and fair. It is a process. That is what Ms Melbourne is reflecting. The same guy is carrying them out. My fear is that it might happen to Niamh or Helen if they ever obtain redress. The reason I initially attempted to proceed directly with the bank was I did not have any faith in the process and I had statistics to support it. What is going on is unacceptable. I ask the committee to listen to the other three people. This should be a landmark moment because here are four people who have waived anonymity and it has had a devastating impact for Mr. Ryan, in particular. The committee can hear from me, but it will be told that I am a show pony and, as the bank stated, that I am only in it for the attention. I can script it, but I do not want to do so. I want a warts and all version. That is the reality and what should be heard.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There are no restrictions on the four people joining Mr. Kissane. If they wish to make their statements, they are more than welcome to do so. That is the purpose of the meeting. I agree with Mr. Kissane and applaud each of the delegates for being brave enough to come here, given how they have been treated by the banks. They will be respected here and receive a hearing.
To answer Ms Melbourne's question, every member of the committee resolves not to give up on those who are experiencing difficulties in their lives which were caused by this issue. By all means, they can speak at their leisure. Committee members are anxious to hear their stories.
Mr. Thomas Ryan:
I apologise if I appear nervous. I want to let the committee know that our case is entirely on the public record.
To answer Deputy Pearse Doherty's question about the customer appeals panel, the figures are available and they are extremely stark. From our point of view, it is absolute madness that there is a Permanent TSB staff member on the panel. For that very reason nothing has gone to the independent review panel. It is absolutely appalling and our case was one of them. I will spend a couple of minutes outlining the history of it.
In early 2009 I rang Permanent TSB's helpline to inquire about a rate change for our mortgage, as advertised. This recorded but crucially withheld call led us to a case review, initially at a local level but then down through the bank's internal complaints procedure, on to the Financial Services Ombudsman's office and, ultimately, the High Court. At its core was the refusal of the bank to honour tracker rates, as per the contract. Incredibly, it was found to have deliberately and repeatedly covered up, lied and misled us and the Financial Services Ombudsman's office, even through the High Court process. In doing so it fought tooth and nail, every inch of the way. Its ploy was to force customers onto much more expensive, rip-off rates which left many people with unsustainable and inflated mortgages. Its deceit was uncovered only when the recording was presented in the High Court in 2011. As a result we won the case which was then sent back to the Financial Services Ombudsman's office.
What had happened to us and countless others could have been totally prevented, as Ms Melbourne said, if the bank had shown a shred of honesty and human decency. Even though there has been partial redress since which we acknowledge, my family have suffered enormously owing to the stress caused. I myself suffered a stroke in 2013, with lasting consequences for my life, family and work. My wife, Clare, suffered a nervous breakdown in 2015, which resulted in her losing her ability to speak. She was hospitalised. It was an horrific experience, not only for Clare but also for our children as she went through long periods of nervous stuttering and stammering without uttering an understandable word. These life-changing traumas will be etched on our memories forever. She can no longer attend large gatherings and gets extremely stressed over relatively minor issues. She still goes through regular periods of speech and cognitive impairment when she feels even mildly stressed. As her husband, I find it pitiful and so unjust to see my wife's confident and bubbly nature stripped away. It is so sad to witness this change in front of her loved ones. It causes her and all of us untold anguish. Aside from the trauma inflicted on us as a couple, the extreme effects of stress on the mental well-being of our teenage children are absolutely heartbreaking and can be so upsetting for us. I cannot begin to convey them in words. Our conditions have been medically documented and have been attributed to huge stress, as we were a normal, healthy and private couple prior to all of this happening.
I cannot express the damaging and fundamental change this has had on us and our entire outlook and the confidence of our children. We beg the committee members, as our representatives, to please sort this mess out once and for all with the help of Mr. Kissane. To quote the summation of the judge in our High Court case, customers are entitled to basic fairness and a duty of good faith by their bank. I thank members for listening.
Mr. Padraic Kissane:
I would like to make a comment at the end of Mr. Ryan's contribution. I refer to a letter from PTSB dated 10 July 2017. A kernel to his case was the missing tape, or the tape that was not made available. The letter said that the bank was not in a position to provide a copy of calls made prior to March 2012 as the system used at that time has been discontinued.
Mr. Thomas Ryan:
If I could just add one point, a friend of mine told me that back all those years ago when we got our tape through the discovery process, he tried to get his tape a week later. As members are aware, all calls are recorded, but he was told the tapes were no longer available. Members can make what they will of that.
Pearse Doherty (Donegal, Sinn Fein)
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Could I ask Mr. Ryan a question before we go on to hear the others? I extend my best wishes to his wife Claire and his children as well. It is heartbreaking listening to those personal stories. I commend Mr. Ryan on doing it. He won his case in the High Court in 2011 and it was referred back to the Financial Services Ombudsman, FSO, who originally rejected the case.
Pearse Doherty (Donegal, Sinn Fein)
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I presume the Financial Services Ombudsman ruled in Mr. Ryan's favour at that point in time.
Pearse Doherty (Donegal, Sinn Fein)
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Did Permanent TSB appeal the decision of the High Court?
Pearse Doherty (Donegal, Sinn Fein)
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It accepted the decision.
Pearse Doherty (Donegal, Sinn Fein)
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Yes. Given that the FSO did not support Mr. Ryan's claim originally because it did not have the tape, he would have had to take on a huge financial risk in terms of taking a case to the High Court, which is not an easy thing for an individual to do. How did he weigh that up? A number of individuals decided not to accept the situation and to fight it through the courts. As a result of that there are many people who were not aware they were being overcharged by the bank who are now-----
Pearse Doherty (Donegal, Sinn Fein)
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That is right.
Pearse Doherty (Donegal, Sinn Fein)
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I understand that. He is someone who is convinced the bank has taken his money and is holding it, in terms of not being given a tracker rate, but then he put more of his own personal money on the line in terms of taking a High Court challenge, which he could have lost. What-----
Mr. Thomas Ryan:
We had to size that up for sure. As a family we had to think long and hard but we were so convinced we were right. We knew we were right in the end and we had since got our contract and we knew we were entitled to it. We were certain. We did have to weigh it up and it was a risk. That is absolutely acknowledged, but we just felt we were so exhausted with the whole process and we just felt we had to go for it. We had little option.
Pearse Doherty (Donegal, Sinn Fein)
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What is Mr. Ryan's view on the fact that nobody is going to be held accountable, according to the banks?
Mr. Thomas Ryan:
It is absolutely appalling. It is appalling that the banks have destroyed lives all over this country. People are no longer with us over this. They have committed suicide. The banks does not particularly give a damn. I have heard some of the submissions here in the last few weeks from some of the banks. It is an absolute disgrace the generic, legalistic garbage they are churning out. There are no real people involved. It is appalling and an absolute disgrace. There are no other words for it. As Mr. Kissane said, it is too little, too late. Action should be enforced on them. They should be made to change and do it right. It is higgledy-piggledy. The redress scheme that is in place is a joke. That is my summation of it.
Pearse Doherty (Donegal, Sinn Fein)
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I thank Mr. Ryan.
Ms Niamh Byrne:
I drew down a mortgage with Ulster Bank in April 2006 and in July 2006, with interest rates going up, I decided to fix. I was a non-permanent teacher at the time. In 2008, when the mortgage fixed period ended, I contacted the bank and asked when I would be put back on my tracker. We were supposed to contact them. They said they were going to put me onto a variable rate. That continued and I argued with them over it for the next nine months until May 2009. In May 2009, I was on a variable rate of 3.85% with Ulster Bank and AIB had a rate of 2.5% for their variable rate. I have a master's degree in economics as well so I knew that as house prices were falling, if I went into negative equity, I would not be able to move my mortgage. My hours were severely decreased in work because of the public service moratorium so I felt I had no choice but to move the mortgage to AIB. At the time there was not really much about people moving or what had happened to people with their tracker mortgages. Talking to the bank was like talking to the desk in front of me. I rang them lots of times thinking I was creating a record by ringing them. I specifically rang them before I moved the mortgage and said to the person on the phone, "I am going to move my mortgage to AIB. Are you really not going to give me my tracker back?", and I was told "no". That was the end of that.
In 2012, I had been looking to sell my house and circumstances changed and it looked like I could rent out my apartment and buy a house. A friend brought to my attention that Ulster Bank was letting people move with their tracker, wholesale so I kind of thought, God, will I try once more. I suppose it is important to say as well that before I fixed my mortgage, I checked with the broker, rang the mortgage centre and I read through the mortgage agreement and all were emphatic that the tracker was for the life of the mortgage. Another condition on the tracker agreement was that one had to be a resident in the house. In August of 2012, I went to the ombudsman and was told that I needed a final response letter from the bank and I said okay. I went back to the bank and the bank tried to tell me at that stage that I was out of time. They tried to put it back to when I originally took out the mortgage but the breach was in 2008, so I was still in time. It went to the Financial Services Ombudsman's office and they asked if we would go to mediation. I said okay, fine and the bank resolutely refused to do so. I asked a member of staff in the ombudsman's office as well at the time how long the process would take and he laid out the process in terms of how long it would normally take and it amounted to five months. That was in October 2012 and the process did not finish until December 2014. It was delayed five times. By delayed, I mean that the process was completed, went to adjudication and five times the ombudsman had to come back for clarification and each time the clarification was from the bank not from myself.
In one of those periods, as Ms Melbourne said, there was an argument about whether I had contacted the bank or not. I produced a phone bill for the bank and said I did contact it. The individual in the bank dealing with the case came back and said, "Well you rang the redemptions line", trying to muddy the waters, as if I had been trying to move the mortgage from the very start. I came back with the form letter and I said, "There is the letter you say you sent out. What is the phone number on the inside address and what is the phone number in the paragraph of the letter telling the customer to ring?" I asked if they told all their customers to ring the redemptions line. That is the kind of carry-on that was going on throughout those two years.
In the end, by the financial ombudsman's standards I had a victory because they did say I should have reverted automatically to my tracker and they awarded me €25,000, but they did not return the tracker. Really, given the amount I would have overpaid over the life of the mortgage, €25,000 is not adequate. I could not take a case to the High Court at that stage. I was absolutely exhausted and kind of let things sit at that stage. By the following autumn the PTSB cases were very much in the news so I thought to myself what could I do. I did a data protection request on the bank and it came back with internal emails which suggested that the bank knew that I had always been entitled to my tracker and had I still been a customer, it would have returned me to my tracker, as per section 2 of my contract, but as I was no longer a customer, it was not going to do that. They also suggested that the ombudsman had no rationale in the financial decisions that they were making and that they knew that so really it was a win for the bank no matter what happened in the ombudsman's office. If I won, they were paying me less than the tracker would have cost them, which they also suggested in the email, and if I did not win then that was even better for them, so that was great. When I saw that then I went and did a data protection request on the ombudsman's office looking for my calculations. I was called by an individual in the office who told me that there were no calculations.
The person wanted to know why I was bothering with a data protection request because I had everything, to which I replied that I was entitled to do a data protection request and I put the request forward. When the Data Protection Commissioner came back to me in January 2016, it revealed that there were no calculations in the data protection documentation. I met people in the ombudsman's office, where it was confirmed to me that they have everything in front of them and they make a random decision. The attitude was that I had done a great deal better than other people. That does not restore me to the position that I should have been in and while all of this has been going on, I have been totally priced out of the market. I can do nothing.
I then started to contact the bank, stating that I had emails to the effect that I was entitled to have my contract back and requesting that it give back the contract to me. I wrote to the bank more than 40 times last year, nearly every week, and eventually the bank invited me to come before them in December 2016. I met a person from their legal department, who acted with no decorum, swaggering into the meeting with a takeaway coffee in his hand. Before the meeting I had been extremely clear with the bank stating that I was only interested in a meeting to resolve the situation, a settlement meeting. At the meeting, the bank personnel spent an hour telling me to stop writing to them. It was extremely distressing and very upsetting. I continued to write to the bank and in January I was deemed by the bank to be impacted. That was great and I let things lie until March. The Central Bank issued guidelines in March, which I think are very clear as to the particular phases. I wrote to the bank, asking them what would happen. I recognise that my case is a bit more complicated because I switched banks. They sent me back letters stating that my case is complex. I then wrote to the Central Bank, setting out what was happening, and stating that the bank was not following the guidelines. The Central Bank was very nice and sent me a letter stating that there was nothing it could do. In my response, I asked them to suggest what I should do. The Central Bank's response was that the bank is engaging with me. Technically, the bank is engaging with me - because it will respond to me every so often - but it is not telling me anything. I would not consider that to mean the bank is engaging with me.
I then applied online to request the office of the Financial Services Ombudsman to compel the bank to follow the guidelines. I did not hear anything for quite a while. When I heard back from them in June, I was told there had been problems with the online complaints system. Perhaps there was, but I am a bit cynical. I think it is funny that it would have happened in my case in particular. That office was not really quite proactive. We were in contact a number of times but a couple of weeks ago they sent me a letter stating that they will not do anything in my case until the examination is finished. That is no good to me.
Last week when Ulster Bank came before the committee I heard them say there were 1,000 customers in a situation similar to me who have not been contacted. I have been contacted purely because I have hounded them. If they have not contacted those 1,000 customers, they are not looking at how they will solve my case any time soon. Today, it is nine years, two months and 28 days since this happened. The whole of my 30s has been spent engaged in this and it looks as if there is no end to it. It has been extremely stressful. It has a significant impact on my finances. There was a suicide in my own family. If one has a direct link to suicide, the statistic is that one has a chance of one in a hundred of it happening to you. I am quite careful to look after my mental health but this situation does not in any way help that. Where is the end of it?
Ms Niamh Byrne:
One other fact, before my case was adjudicated on in 2012, Ulster Bank asked to stop the case to make an offer. The Ulster Bank offer was €12,500, which was ridiculous and I was never going to accept it. I gave them a list of costs. I admit it was a laundry list of costs, right down to tax relief at source, TRS, the whole lot and the bank did not even negotiate. The bank deemed me a very difficult customer and immediately went bank to the Financial Services Ombudsman's process to restart the process. I have since learned anecdotally that this is happening in numerous case. This is the modus operandi in the office of the Financial Services Ombudsman, that the people there push and push to make it as difficult as possible for the customer and they hope just before the end that they will catch them with a low ball offer and resolve the case that way.
Rose Conway Walsh (Sinn Fein)
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I thank Ms Byrne, Mr. Kissane and Mr. Ryan for sharing their real life experiences. I appreciate how difficult it is for the witnesses to do that. For any person to be exposed to that type of scrutiny and publicity around his or her personal life and financial life is absolutely devastating. I thank them for doing it on behalf of all of the other people to whom we are talking on a daily basis. One thing is certain; it has to stop. The question for members is how do we make it stop now.
The witnesses would have been able to watch the banks when their representatives came before the committee. It is obvious that these people are honed within an inch of their lives in terms of presenting and the ambiguity of their statements and that they are practised and trained in all ways not to answer the questions that we are putting to them. I have asked each of them if they have been contacted by An Garda Síochána because I cannot understand why not. The Central Bank told us a number of months ago that in its view, there could be openings for criminal investigations. Why does Mr. Kissane think the Garda is not involved in this? In the same vein, I ask the witnesses whether they have been to the Garda about what has happened to them.
Mr. Padraic Kissane:
I call fraud the "F" word. I have been asked a number of time whether I considered the issue of fraud, but of course, the desire from the outset was to restore the tracker rate for customers. I can tell the bank within two minutes whether a client is entitled to a tracker mortgage. I can tell it the rate and the calculations and I have no access to the bank's systems. One can multiply that by the figures in my estimation that have been impacted. If the accounts of everybody who is impacted and should be corrected is corrected, I think the figures will approach 30,000 accounts. I purposely use the words "accounts" again because of the numbers of people affected. The Minister for Finance is affected by what the banks did. He is trying to get recovery. One is talking about a large cohort of the taxpayers overpaying sums ranging from €600, €700, €1,000,€1,200 and €1,500. One has to earn double this amount to pay it. If I press the button to the degree that it would have needed to be pushed, I do not believe for a minute that it would have solved anything because it would have added further delay to the process of restoring the tracker rates to customers. That is all I ever intended to do from the outset through the ombudsman's process. Initially, I was dealing directly with the banks but that was a waste of time. It is important to say that what caused this issue was the cost of money on the international markets. I was asked recently to explain what had occurred in two sentences, it is as follows. These four witnesses had control of the interest rates that the bank could charge with a tracker mortgage. When the banks hit the money market that went against them, they did everything in their power to get that control back. That is what caused it and that is what it is. To individualise that, which one would have to in a fraud case, to individuals within the banks would prove next to impossible. I know that if this happened in the United States, it would be a different scenario. I cannot, on behalf of all of the people affected, bring a class action. Such lawsuits are prevented from occurring in this country. Everything that has to happen to get a righteous outcome is the reason we have come to this committee. We are asking what we believe to be the biggest power in the country to take the action to do something. It is an important question, but it is not a question for me. The only question for me is to get the customers back on their tracker rate. That is all I ever set out to do.
Rose Conway Walsh (Sinn Fein)
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What do we need to do to enable somebody to take a class action?
Mr. Padraic Kissane:
I have no idea. I have not even begun to research the area. It cannot be that difficult because it is allowed in other countries. There are myriad issues regarding the legal side. To be honest, it would take me another project to get that under way and it is not for the moment. We are at a very important juncture in the tracker investigation and I need to keep my focus on finding the customers who are and should be impacted and they are two important words. I will not allow the banks to be the identifier of those accounts.
Rose Conway Walsh (Sinn Fein)
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I understand. This committee wants to support the work Mr. Kissane is doing and facilitate and move that along, but we really are running out of patience. What are the experiences of the other witnesses in contacting the Garda and what were the responses?
Ms Niamh Byrne:
I spoke to the Garda in Harcourt Street and I also spoke to the Office of the Director of Corporate Enforcement, ODCE, regarding fraudulent trading. In both cases, they told me that the burden of proof is so high that one probably needs a whistleblower to come forward. Even with the emails I had, the burden of proof is too high and would be insufficient in court. It is mens rea. That is the problem. One has to prove they did it on purpose and the issue is being able to prove that.
Mr. Padraic Kissane:
The Senator asked a very simple question about some of these banks. I observe the human face quite closely in people. In one particular bank, which does not need to be named, next to him was the guy who knew exactly the script of the answer because he was nodding. He was almost mouthing the same words. Why is it created? There is a huge responsibility on these external auditors and external legal firms that are brought in. They are party to this as well, like it or lump it, and I am telling them today that they are party to it. These individuals are able to go home and put their heads on their pillows and not have to make the difficult choices for their children that people have had to make. That is unfair and morally unjust and that is what must be corrected. In respect of that particular case, I had just moved to Ms Grogan, who also has a remarkable story of what has gone on. How they can attempt to leave this lady without the tracker rate to which she is entitled is just off the charts when it comes to even stupidity.
Rose Conway Walsh (Sinn Fein)
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I will move to Ms Grogan in one second.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Senator should finish her round of questioning.
Rose Conway Walsh (Sinn Fein)
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It is disgraceful. The signal going out is that someone can get away with fraud and cover up and just because it cannot be proved or because the cover up is so good, it cannot be got at in terms of Garda investigation.
Mr. Padraic Kissane:
I would put it far more simply. Customer relations; the banks' reputation; "help for what matters", as one of the banks say; and "the bank of you" are lies if this is how they treat their customers. The banks are trying to put out fundamental lies - marketing nonsense, as I call it. This comes down to the integrity of financial services. They have destroyed the integrity of financial services and if there is anything I will do on a broader sense and a longer-term basis, it is attempting to restore that integrity. Somebody has to step into that space because I am telling every bank today that space is currently empty.
Rose Conway Walsh (Sinn Fein)
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The Central Bank will appear before us next week. If there is one thing Mr. Kissane wants the Central Bank to agree on public record to do before it goes out the door, what would it be?
Rose Conway Walsh (Sinn Fein)
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We just do not want to continue on with this. We have nearly a full day with the Central Bank and want to make sure that the people we have heard from today-----
Mr. Thomas Ryan:
Everybody under Mr. Kissane's wing would agree with that fully. He seems to be the only person out there fighting for us and we can honestly say that he is there for us and is genuinely trying hard instead of fluffing us off with crap because all we are getting is crap. He is right. The integrity of the banks in all our cases - all the lenders across the country, whoever is affected by this - is zero. I reiterate that one thing that should be looked is the customer appeals panel. The customer appeals panel has a member from PTSB. It is supposed to be independent but is it not very stark that not one of them put it satisfactorily to the independent review panel? It did not see fit to put our case and many other cases to an independent panel. It is a joke that somebody from the banks is on the customer appeals panel.
Rose Conway Walsh (Sinn Fein)
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Would Mr. Kissane have expected the Central Bank to object to that or to address it?
Mr. Padraic Kissane:
It is important that it is understood that first of all, the appeals process is voluntary. The banks had to adopt it. As the Central Bank said to me, it designed a process that was not in existence. My reply was that it did mean it could not be improved. Unfortunately, the PTSB people have essentially become guinea pigs in the process because, as I said recently, the investigation is nearly becoming an investigation. The investigation is widening its scope and that is why the numbers are going up. It is because if we properly applied the directives and the laws in place to prevent this from happening, it was a certainty that there would be more cases involved. I have cohorts of affected customers in every single bank, including the banks that moved further down the line, and there should be redress for them. The game that will commence involves those who the banks state are not affected and those who I stated are affected, which is a further frustration. This is the kernel of what is coming next because there is no way I will end up with 5,000 accounts sitting in a waiting room because the process of investigation has failed them. It should not be allowed to occur.
Rose Conway Walsh (Sinn Fein)
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I am keen to hear from the rest of the witnesses.
Ms Helen Grogan:
I thank the committee for giving me the opportunity to speak today. I took out a 1% tracker mortgage initially with EBS to cover the mortgage on my home in 2005. It was a big mortgage with big repayments. At the time, there was a lot of competition between the banks for customers and PTSB was offering a 0.8% tracker mortgage. Normally I would not have changed for that small reduction but because it was such a big mortgage, I decided a little bit of a reduction in the interest rate would be to my benefit over the longer term of the mortgage, so I decided I was going to switch my mortgage from EBS, which was a 1% lifetime tracker, to the PTSB product, which was a 0.8% tracker. I went into the office and told the mortgage adviser about my case. I had a big mortgage and wanted to reduce my repayments as much as I could and get good value and this product seemed to answer that for me. She said this 0.8% tracker had been discounted for a year to 0.6% so it was even better value and I thought that this was great, an extra bit of money for a year.
I went through the process of switching my mortgage from EBS to PTSB for that one-year discounted tracker. At the end of that one-year period when I was expecting to get my 0.8% tracker rate, all of a sudden, I was told that my tracker rate was now 2.25%. The bank gave me options to choose from. To me, that sounded like I had been on a one-year fixed-rate product, which I would never go for because that sort of gimmick never attracted me. The bank offered a tracker of 2.25% or a variable rate, which was actually lower than the tracker rate. The tracker rate made it a much more expensive product so under duress, because I did not want the repayments to go up so high, I went for the variable rate. I complained to the bank and went through its complaints procedure. Finally, I complained to the Financial Services Ombudsman.
In the following year, that variable rate started to go up and up. The Permanent TSB variable rate went up higher than everybody else's and all of a sudden it was very high compared with what it would have been had I stayed on the higher tracker rate. I took my case to the Financial Services Ombudsman on the basis that it was mis-selling and misadvising this tracker. It was supposed to be a discounted tracker. It found against me on the basis that there was a special condition, No. 9 in the mortgage contract, that gave them permission to do this.
Then they did not sell me a discounted tracker but a one-year tracker. They did not sell me a discounted tracker because it was not discounted from anything. My understanding going into the office was that it was a 0.8% tracker that they had then discounted for the first year. That is my case and I am trying to get the 0.8% tracker restored. I have moved bank now because the variable rate went so high. Over the nine years or so that I have been on that variable rate, I have paid more than €40,000 extra in interest rate. If it continued to the end of the mortgage, it would probably be in the region of €70,000 or €80,000. That is money I cannot afford to pay and that would be far better in my pocket.
I am coming up for retirement soon and am going to have a mortgage after I retire. That was something I was trying to avoid. I had always planned to try to pay back a bit extra in order that when my retirement age came I would not have a mortgage. Now my mortgage will continue until I am 68 or 69. I am just looking for justice. I feel rage, frustration and anger that I was ripped off by the bank and duped into thinking I had a product that I could count on. It took me a couple of years to get over the fact that the ombudsman found against me. Like Ms Byrne, I did not have the energy or the finances to go to the High Court. Gradually, I had to just put it behind me and get on with things. When I heard about Mr. Kissane's success with cases in 2015, all of a sudden I realised I was not alone and not the only person to whom this has happened. It is such a disgrace that we are all made to feel responsible for making a silly or stupid decision or not getting the right advice and letting the banks ride roughshod over us. How can banks change these terms and conditions willy-nilly? Had I taken out that discounted tracker mortgage two months earlier, I would be on the 0.8% rate now. However, all of a sudden, all of the terms and conditions changed. The bank changed what a tracker mortgage means. I know what a tracker mortgage means. We all knew what they meant. The banks were the ones that did not know because they were changing the rules and the terms and conditions. That is just not fair.
Mr. Padraic Kissane:
Ms Grogan mentioned that she went into a branch of PTSB and met a mortgage adviser. The bank does not advise on mortgages. It is astonishing stuff. If they had to admit that they advised on her mortgage, it would create a fiduciary duty of care. The only reason they stated that they do not advise on mortgages is to prevent that from occurring. It opens them up to legal problems. Ulster Bank responded to me, in respect of a complaint, that they "have no fiduciary duty of care to [their] customer and as such are entitled to look after [their] own economic welfare." The committee is starting to understand the world in which I have had to exist since 2009, when nobody listened. Similar to Ms Byrne, before I advised my clients in Ulster Bank to fix for three years, I rang Ulster Bank. If the members ask the bank officials today, they will deny ever telling me that the people would go back to tracker. I had to find out for my clients before I gave the advice, because I was advising on the mortgage. This is the type of trickery and nonsense. "Condescending" is the word I would use. It was an attitude of "Who do you think you are to even challenge the hierarchy of a bank?" All of a sudden, the reply to questions as to all those who were in the bank at that time is that they are gone now. That does not absolve the name of the bank from the actions of such people. There are some who are getting it but, by God, it is a torturous journey.
Ms Niamh Byrne:
The bank also says it could not stand by what a broker tells a client, but the broker is the bank's agent. When a client speaks to a broker, it is as if he or she is speaking to the bank. The bank has contracted with that broker to act on its behalf. Therefore it cannot say that, although it tries to do so.
Kieran O'Donnell (Fine Gael)
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The witnesses' stories are very stark. I am from Limerick, where we deal with people like this at all stages. The witnesses are a few of many and it is fantastic that they have gone public. Mr. Kissane has dealt with the banks. We have had them here repeatedly, as well as the Central Bank, in respect of the trackers. I find it astounding that the banks do not have the information at their fingertips that the Central Bank review requires. In my dealings with banks, if one is going to them looking for something, they normally have the information overnight to counteract one, if it is to their advantage. Why is it taking so long for them to comply with the requirements for the Central Bank review? We live in an age of systems and computers. I would say every customer is itemised within the bank. Why is this taking so long?
Mr. Padraic Kissane:
I think everybody in the room knows why it is taking so long; they just do not want to say it. We all know the answer. It is to stop the admission. I would say some of the banks' actions were on the basis of letting the first guy down the road to see how he got on, and then adopting, correcting, changing, swinging and adjusting their position accordingly. They wanted to see if there were any legal errors made that they could improve on. The one purpose is to get the number affected as low as possible. It is as clear as day that this is what is going on.
The length of time it has taken is frustrating, as I have said before. For the banks to think about doing this is bad enough, but for them to set about doing it and covering it up is the fundamental disgrace. There is so much that I could say but I have to be careful because they are waiting for me to trip up. The committee can be absolutely certain that they are all watching this and are waiting for me to say something so they can be in my door with litigation and so forth. I have run that gauntlet since 2011 or 2012 when I went public. There is one fundamental I stick with: Two plus two equals four. It is never three and is never going to be five. It is a simplistic argument. Without access to their systems, I can tell them more about their accounts. If they gave me a set of an account today I would tell them to the cent what the overcharge was and what it would cost going forward. It is not complicated.
Kieran O'Donnell (Fine Gael)
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Why, then, is the Central Bank affording the banks so much time to comply with the review? Is it credible that the Central Bank does not have the power to insist on the banks coming forward with the information in a matter of weeks? To the ordinary person looking in, it appears that the tail is wagging the dog. The banks are telling the Central Bank they cannot come up with the information in the requisite time. Is that credible?
Mr. Padraic Kissane:
It is not credible. Let us say there are 3,500 accounts. It would not be possible. The redress letter, for example, is a very complicated document because they have to get every cost right and they know there are people like me out there who are going to check it closely. It has to be right. They had a process to trick people but they did not have a process to put them back. I honestly believe they never thought they would get caught. To move from there to actually having to come out and hold their hands up - the easy part for these guys is to apologise. The harder part is getting down and dirty. I have heard every single bank come into this room and tell the committee about the levels of work going on and the number of people involved in doing it - but the banks caused it. Why is that a boast? Why is that even something they would say? What I find astonishing is that if any of the customers miss a payment, there is a letter generated within an hour.
Kieran O'Donnell (Fine Gael)
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I personally do not believe it is credible that this is taking so long. Given the level of sophistication they are at, I believe the banks are kicking the can down the road.
When representatives of the Central Bank appear before the committee next week, we need to be told why this is taking so long. On the issue of ensuring it is accurate, I have heard-----
Mr. Padraic Kissane:
The scope of the investigation has widened and it has only come about since 2015. I know many would not accept this but, based on the work I have done with the Central Bank, I believe they have actually come a long way in what would be considered quite a short time. The problem is that the overcharging is now being identified as having occurred initially from 2008-2009 onwards. That is what is causing the issue.
In some respects, I am nearly responsible for the length of time Ulster Bank is taking because one of the first things I told the Central Bank was, "The first thing you must do is, when identified, stop the harm; put them on the tracker rate." I agree the redress process should not have taken since March and I do not know why it has. It has set off with a test amount of approximately 40 people. I know where people are going now. In reality - the banks are correct in this - they are essentially borrowing from themselves at the moment because most of the €200 million provision belongs to their customers.
The guys who are happiest in all of this are the consultants, the external auditors and the legal firms. They are absolutely loving this. All bank directors I have spoken to have said they want this resolved.
Kieran O'Donnell (Fine Gael)
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When did Mr. Kissane bring the issue of tracker mortgages and the rip-off to the attention of the Central Bank?
Kieran O'Donnell (Fine Gael)
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Was the Central Bank too late in moving to carry out this review and put this redress in place?
Mr. Padraic Kissane:
It was late for sure. The redress process in 2015 was not even there, it had to be adopted. It was resisted. It was voluntary when PTSB accepted it. A lot has happened in a short time in that regard because they came from having nothing in place to redress it. I do not believe they thought it was going to be as big an issue as it became. Some of that blame lies with the Central Bank for sure. In challenging and throwing the mud of blame entirely at the Central Bank-----
Kieran O'Donnell (Fine Gael)
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I did not say that.
Kieran O'Donnell (Fine Gael)
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If there is a lax regulation regime, the banks will drive on. The Central Bank is the regulator.
What have Ms Grogan, Ms Melbourne, Mr. Ryan and Ms Byrne learned from this traumatic experience? What would they like to see happening now?
Ms Helen Grogan:
I would certainly like to see the Central Bank being able to stop the ordinary banks changing definitions and terms and conditions just like that, as they did with the discounted tracker mortgage product. I went to Educational Building Society for my mortgage. I went to Permanent TSB, which is also a building society. I went there because I trusted that building societies had my interests at heart. I have lost complete faith in the banking system now. I do not trust banks at all. I go to them with a wary eye knowing that they are not really on my side. They just want to make money. I, as a customer, do not really matter. They use all the "good customer" speak of looking after the customer, but they are not really; it is just words. Therefore, I do not trust them any more.
Ms Hazel Melbourne:
I would like a deadline to be set. I would like to know when this is going to finish. I just want my own money back so that I can move forward. I want to stop being asked for proof of how it has damaged our family because it is heartbreaking to have to relive everything over and over again.
Mr. Thomas Ryan:
In my view and that of my family, PTSB is in the gutter. Mr. Kissane should be invited to direct and assist the Central Bank in putting this right. He should be front and centre. While this may not be appropriate, I think he should be invited along with representatives of the Central Bank for input.
On Deputy Pearse Doherty's point, we can only speak about our own private cases. I did not put up any money for the High Court case at all. It was a risk, yes, but I put no money up.
In answer to the Senator's earlier question, what really sickened us and many people who have been here is to think that the banks put up the full armoury of their legal team behind what was, in our case, a total lie. It was a slam-dunk case, but they put up massive money to try to fight a case that was fundamentally flawed.
Ms Niamh Byrne:
I just want control of my life back. I want to be able to make financial decisions that normal people make. I want to be free of the worry about what might happen and what impact it might have on my life. A question was asked about confidence in the banks. My confidence in institutions that are supposed to help me has also been totally shaken. I refer to the Office of the Ombudsman, the Central Bank and others from which one might seek help. I do not really feel they help me. I am lucky because I was able to figure out most of it by myself. However, what happens to somebody who cannot do that or does not know that someone like Mr. Kissane is around?
Paddy Burke (Fine Gael)
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I welcome Mr. Kissane, Ms Grogan, Ms Melbourne, Mr. Ryan and Ms Byrne. I have the greatest of sympathy for them and my heart goes out to them. What the banks have done to them and thousands of other people throughout the country and is dreadful.
On redress, all the cases are similar but different. Ms Grogan has said she will have to pay a mortgage even when she retires. I believe Ms Byrne said she would-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I ask the Senator to remove his phone.
Paddy Burke (Fine Gael)
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----- find herself out of the market. Is the redress scheme for the life of the mortgage?
Paddy Burke (Fine Gael)
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Is the redress scheme for the life of the mortgage?
Mr. Padraic Kissane:
If the tracker rate is restored, it is for the life of the mortgage. The purpose of the redress is to put the account in the position it would have been in, had the "error" - in inverted commas - not occurred. That is the purpose of the redress process. To do that, it has to be backdated to when it was first deemed to have been impacted upon. Some of those dates can also be argued. There is then a correction on the account and there is also an interest differential between what the customer paid what and should have paid. Out of that comes a time-value-of-money aspect, which I got included with AIB. Contrary to what PTSB has advised me, it is not included and this is just an example of what we have to put up with.
There is also a compensation level which varies between banks. PTSB was at 10% across the board. Astonishingly, it was meant to be a base level of compensation, which in the customer appeals process became the ceiling of compensation. Customers had to burst a level of proof beyond any court to get through it. AIB ranged between 7.5% and 15%. If it was an investment loan that did not have detrimental impact, 7.5% was given back. If it was a home owner, it was 15%. The one I have seen at Ulster Bank is 12% if the interest overpaid and a time-value of money is also to be included.
Paddy Burke (Fine Gael)
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Representatives of Ulster Bank told the committee that it had employed 200 extra staff on this process, that it could not go any faster, that it had put aside a certain amount of money to pay the redress and that it has to wait for clearance from the Central Bank. Why can it not go any faster and pay out the money? As Senator Kieran O'Donnell has said, banks are very thorough in everything they do. Mr. Kissane has suggested that the process should be fairly simple.
In view of Ulster Bank having 200 staff working on the process and money set aside for redress, why can it not do this overnight?
Mr. Padraic Kissane:
I can only guess as to the answer. I have five staff who work extremely hard. We handled over 100 appeals in respect of PTSB and will handle more than 130 appeals regarding AIB. We work extremely hard for very long hours. The calculations and papers have to be checked. If I had 200 staff to run the process, a lot would be done. The system dictates what is redressed and what people have been overcharged and staff are not needed for that. The 200 staff are probably working in a process that started off as being defensive rather than receptive and I am not certain that has changed.
Paddy Burke (Fine Gael)
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Mr. Kissane said the bank does not advise as regards mortgages.
Paddy Burke (Fine Gael)
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The banks say that. When Mr. Gerry Mallon of Ulster Bank appeared before the committee, I asked him whether his bank, when it makes a loan available to a customer, advises him or her of other costs such as insurance, mortgage protection and insurance against job loss that can be a significant annual cost on top of the mortgage and which many people do not take into account. I asked if the bank advises its customers about those charges and what may happen. Mr. Mallon replied:
Yes, as part of the credit approval process for mortgage approval we take the customers through an affordability calculation in which we will talk them through not only those elements but all the other elements of their underlying finances to understand what they can afford. A stress is put on that as well. If we assume that interest rates vary, we will calculate on the basis of that and test the customer's future affordability.
He says they do advise; Mr. Kissane says they do not.
Mr. Padraic Kissane:
The banks have told me in writing that they do not advise. An interesting issue in Mr. Mallon's reply is the stress testing of a mortgage. The stress testing of a mortgage in the case of Ms Grogan, Ms Ryan or any of the bank customers present would have been the interest rates at the time plus 2%. How did the margin become 3.25%? I can challenge the banks. My door is open. I am a reasonable person and have been waiting since 2009 for a position of correctness to be presented to me by the banks. I have submitted many ideas and suggestions. I did so recently regarding an argument about probably another 136 with PTSB. How many were adopted? None. I have been told I should write a book about my dealings with banks. However, there are more serious aspects on a broader scale to what is going on. My long-term intention is to really change the game and start doing mortgages. The product name would be the European mortgage. KBC is shouting from the rooftops about its offering a rate of 2.95% fixed for ten years. The ten-year fixed rate in Germany is currently 1.15%. We are still being shafted. The housing crisis is connected to every tentacle of the issues of the country. Some people are homeless are a result of what has gone on. Some of those trying to buy homes today have to go back to the same perpetrators in order to do so. Banks are no longer offering tracker mortgages to new customers. Could members imagine the headline in newspapers tomorrow morning, "Padraic Kissane introduces tracker and full-term fixed-rate mortgages to the marketplace"? That would show the banks and it is what needs to happen. Banks would be offering tracker mortgages again within a month.
Paddy Burke (Fine Gael)
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And ten-year fixed-rate loans in Ireland are at 2.9%.
Paddy Burke (Fine Gael)
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Mr. Kissane is saying the banks have formed a cartel in order to keep interest rates up.
Mr. Padraic Kissane:
Their figures show that. They boast about profit levels and do not realise the carnage they cause. There was an article in a newspaper about a person who recently left one of the banks. The only word I did not see mentioned in the two-page article was "customers". Everybody else was thanked.
Paddy Burke (Fine Gael)
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Does Mr. Kissane think the bank customers who have attended today's meeting, as well as other bank customers, have been let down by the financial ombudsman?
Mr. Padraic Kissane:
It is important to differentiate between the current ombudsman and his predecessor. Under the current ombudsman, Mr. Deering, the service provided has changed. I had very little faith in the previous ombudsman. Four bank customers came to me after bringing cases to him and being ruled against. The facts of those cases were identical to two cases that I had won. I brought the cases to the former ombudsman and asked him to explain the reasons for that.
Paddy Burke (Fine Gael)
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Mr. Kissane thinks the previous ombudsman let all those people down.
Mr. Padraic Kissane:
Without a doubt. Members of the public should not have to ask me to present their cases to the financial ombudsman. The latter was set up by the Oireachtas to address the perceived imbalance against consumers when challenging financial institutions. The process that was in place until recently did anything but that. I asked the former ombudsman why the uphold ratio in the UK was 55% and was told it is a more informal process.
Paddy Burke (Fine Gael)
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My next question may have been asked already. The Central Bank has a lot of power and banks have told the committee they are subject to its powers, to its oversight, etc. From what Mr. Kissane said, it seems the Central Bank is not using its powers. Should the Oireachtas should give it more power to take further action? Does it have enough power to wield the axe?
Mr. Padraic Kissane:
In terms of the powers of the Central Bank, one needs to focus on particular areas. If one takes a microscopic view of the issue, the powers of the Central Bank have improved but are still of a receptive nature. The atmosphere of the Central Bank needs to change so as to be directive rather than receptive. We should not wait for the banks to tell us. External auditors for the tracker investigation have to be separated from their current external auditors and they are all just being moved around. It has been said that Chinese walls have been established to ensure independence. The only Chinese wall is that which can be seen from space because there is no such thing in what I deal with. What will the report say in approximately a year and a half or however long the investigation will take?
I pay tribute to the four brave bank customers who have given evidence to the committee. Do banks realise what it takes for people to give up their anonymity and privacy in order to highlight this issue? What has gone on is astonishing. I said to the Chairman that if he does not believe me, he should listen to the people. I have hundreds of these cases in my office and each one has a story. I have not had a single pretender in my office and am long enough in the business to be able to see through any lies. I do not encounter fictitious claims or people making things up. One infamous night, I asked a lady in my office what she would want from the process if she had a magic wand that could do anything, . Her answer astounded me. She wanted to humiliate the bank in the same way it had humiliated her. It had nothing to do with money. That is what the committee is hearing. These are reasonable people. They are the banks' goddamn customers and they remain the banks' customers. The irony is that many will remain mortgage customers of the banks for 20 years or more. The abuse suffered by customers is unacceptable and astonishing.
Paddy Burke (Fine Gael)
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Ulster Bank told the committee on 5 October that it does not have any cases on appeal.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank Mr. Kissane, Ms Grogan, Ms Melbourne, Mr. Ryan and Ms Byrne for their contributions.
It has come to this: we have to hear directly from customers in order to put a human face on a scandal that has been allowed to go on for far too long. I tend to agree with Mr. Kissane about external auditors and legal firms. Some way has to be found to hold them to account because they stood over this and must have seen it. The question has to be asked: did they see it and do they consider it to be fraud? What happened in all of the banks to allow this to happen at the same time? It happened in a number of banking institutions. The work of this committee has been structured over the past while in a way that allowed us to hear from the banks and customers. There is an endless number of letters and correspondence which tell similar stories to the four we have heard here today. It takes a big degree of bravery to come forward, waive one's anonymity and tell one's story. All of us here respect that. Of the other stories we have read, the message that comes out is that people are afraid of the banks and the big legal teams that can be used against them. They are afraid their lives will be further ruined by the activities of the bank. That has to change and that is down to the Central Bank.
All of this was going on before the crash. There were Chinese walls and people pretending not to know what was going on across the wall. The whole banking system was behaving in a way that allowed it to get over the regulation and so on. That is what has us where we are. Our next step is the Central Bank. We will carry the witnesses' stories into that hearing. Do the witnesses want to say anything now? I think we have heard everything they have said. If there is any issue they want to stress before they leave, I ask them to please do so.
Mr. Padraic Kissane:
I will summarise some points. I have a host of staff from these very same banks in my office attempting to get their tracker mortgages back. I have staff from the auditing firms in my office trying to get their tracker mortgages back. I have staff from the legal firms in my office trying to get their tracker mortgages back. There is an issue of fear among the staff of these banks. They are afraid and many are told to drop it because it will affect their careers. One man who was told that had to move to a back-office position as a result of the fitness and probity concerns about the overcharging that went on. It resonates everywhere. I thank the bravery of the four witnesses because I know how difficult it is to go public on the matter. To go public about one's personal account is difficult. People who cry in my office do so for a reason. I have sat through hours of those tears. It is not acceptable. We ask on behalf of the thousands - a number that continues to grow - and especially the children and families, who the hell did they think they were to do what they did?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Has everyone said their piece?
Pearse Doherty (Donegal, Sinn Fein)
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I commend the bravery of all our guests. Hopefully, their bravery will encourage whistleblowers from the banks and financial institutions to come forward and give us the evidence we need. We have called for a class action. There is a Law Reform Commission report and legislation and orders have been drafted since 2005 to allow for class actions. I hope it will be acted upon so the victims of the scandal can take actions through the courts as a group.
My question is for Mr. Kissane. He mentioned earlier that he thinks the final number is closer to 30,000. We know the banks have all submitted their phase 2 information. KBC has missed the deadline so at least one bank missed it. The Central Bank will now have a good handle on what the banks have identified. Does Mr. Kissane believe the figure will creep up above 20,000 or does he believe that there are still some outside the scope of the review?
Mr. Padraic Kissane:
There are certainly cases outside its scope. There are cohorts of people in every bank who are deemed not to have been impacted upon. I could say a lot more. We need the phases to develop. If every cohort I have was restored, it would absolutely be in excess of 30,000 accounts, without a shadow of a doubt.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank the witnesses. We will suspend while we invite in our other guests.