Oireachtas Joint and Select Committees
Thursday, 1 February 2018
Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach
Tracker Mortgages: Ulster Bank
9:00 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We are dealing with item 5, progress on the resolution of the tracker mortgage redress issue. We are joined from Ulster Bank by Mr. Paul Stanley, chief financial officer; and Ms Elizabeth Arnett, head of corporate affairs. I welcome them and their colleagues who accompany them.
I advise the 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 the committee. However, if they are directed by the committee to cease giving evidence on 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 they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
I invite Mr. Stanley to make his opening statement.
Mr. Paul Stanley:
I thank the Chairman and the committee for the opportunity to discuss the tracker mortgage issue and Ulster Bank's progress in putting this right for our customers. I am the chief financial officer of Ulster Bank Ireland DAC and I am joined today by Ms Elizabeth Arnett, head of corporate affairs.
As the committee is aware, we are in a close period and therefore we cannot discuss issues which may trigger discussion of financially sensitive information regarding provisions or disclosures. There may be some questions that stray into this territory. I will be happy to take those questions away if I cannot answer them and come back to the committee where I can. We are here to discuss the progress made regarding resolution of the tracker mortgage redress issue. I will give an overview of this and then we will be very happy to take questions, which I am sure committee members have.
As committee members know, our examination is ongoing and we have, as part of our phase 2, identified just under 3,500 customers who are impacted. The impact on these customers and the length of time it is taking to pay redress and compensation is unacceptable and, rightfully, we are being challenged on this. I repeat the apology that Ulster Bank has made to our customers in this regard.
When the Central Bank tracker mortgage examination letter arrived in our bank we took a number of months to consider how to respond, but by March 2016 we had begun the process of establishing our programme. In hindsight what we should have done was mobilise somewhat earlier and have deliberations concurrently. By doing it the other way we probably added three months to our programme that potentially could have been avoided.
The work involved in identifying impacted customers is one of the largest and most complicated projects ever undertaken by the bank. We have more than 200 people working full time on the programme. I know this is no consolation to people who have been waiting too long for the redress and compensation to which they are entitled, but let me try to explain the challenge of the process in more detail.
Ulster Bank started with 300,000 customers in the scope of the examination. They were customers who were active, redeemed or sold between 2001 and 2015. Customer journeys were segmented into different categories, which required different levels of review. By way of example, these customers include those who drew down on a tracker rate and did not move to any other product or margin at any time. There are approximately 64,000 of these and we could discount them from the process quickly. Of the 300,000 mortgages, we carried out an in-depth review of over 7,000 to determine whether or not they were impacted. As I am sure the committee appreciates, this involved a lengthy process of rebuilding customer files, locating original hard copies of documentation and putting together a full journey of what those customers went through. This process was made difficult in Ulster Bank because we were dealing with five mortgage systems across two banks extending for a period of over a decade and a half. There was a high degree of variety in these accounts. We found over 1,600 different journeys, with some customers having up to 20 different points in that journey. By way of example, a journey includes mortgage drawdown, product switches, any rate changes, any forbearance or special arrangements and mortgage redemption. This process identified just under 3,500 impacted customers and is set out in the phase 2 report we submitted to the Central Bank. As of quarter three of 2017, we made a provision of €211 million for this project, which includes administration costs and compensation and remediation to customers.
In designing the examination, the Central Bank framework requires that we look retrospectively at our loan book and apply a contractual, regulatory and, very importantly, customer lens to determine whether there is an impact. The vast majority of the 3,500 customers were impacted due to ambiguous and potentially confusing terminology in our documentation, and as a result, these customers did not get the correct rate. I do not wish to appear to minimise the nature of the impact, but rather to give the committee an understanding of what we have found as a result of our work to date on the examination.
The ambiguity in the documentation we produced presented circumstances whereby our subsequent actions certainly disadvantaged our customers. The requirement to be clear in all communications with customers is the minimum standard to which we must, and do, hold ourselves. In this regard, we did not meet the standards and we failed our customers. We deeply regret this and apologise unreservedly to all impacted customers. We are putting this right, accepting the pace is frustratingly slow for our customers and for ourselves.
In total, the transparency and ambiguity issue to which I have referred affected approximately 88% of the 3,500 customers. The other 12% were primarily due to operational errors and the absence of required warnings. Approximately 2,500 of impacted customers are still with Ulster Bank and we have returned them to their correct rate. We stopped the harm as quickly as we could. As the committee is aware, this happened on a phased basis, mostly during the first quarter of 2017 and the back end of 2016. For customers who are no longer with Ulster Bank, we are working through their remediation, with a commitment to complete this and our commitment on the overall 3,500, by the end of the second quarter of 2018.
For customers who lost their homes as a result of the tracker mortgage issue, we have a special process in place on top of the standard remediation. For example, where we identify customers who have lost their homes as a result of the loss of a tracker rate, we communicate with them, appoint a single point of contact for them, arrange a meeting and offer an upfront initial payment of €50,000 in advance of completing the full redress and compensation process. We commenced the process of paying redress and compensation in September and to date we have paid more than 1,200 customers.
There are a number of key principles for us in this phase of the examination. It is very important for us that we put each customer back to the position he or she would have been in had the error not occurred. This involves reconstruction of each customer account using the correct interest rate; quantification of the amount of interest overcharged at the incorrect rate, and reversal of that overcharge; calculation of the monthly repayments that should have been paid by the customer and a refund of the difference between that total and what was paid by the customer; and restoration of the mortgage balance to what should now be outstanding, following reversal of the interest overcharge and refund of repayments.
The letters we write to customers are designed to complete a picture for them. In some cases these can contain up to 30 pages but they also include a summary. They contain a full financial statement going back to the month when the impact happened and provide a month by month statement for the years the impact happened. Customer accounts, in calculating redress amounts require manual intervention and calculations. At present, this cannot be systemised because of the multiple variations that exist in each customer journey. This necessitates additional quality control and assurance checks. In calculating redress and compensation for even straightforward cases, there are up to 120 separate data points that can move each time there is an additional payment on the account. This means the calculation is very time sensitive. For live Ulster Bank customers, a short period opens up each month when all of the data is collected and reviewed, the calculations are made, the calculations are checked, the letter is compiled and checked and then issued before the next payment is made on the account and the data points have changed. This has been a slow and challenging process, and I would not even begin to express how difficult this has been for customers. We are focused on paying what is due to all impacted customers as quickly as possible. There is no advantage for us if we drag our feet on making this right and there is certainly no advantage for our customers.
We have more than just a regulatory or contractual obligation to our customers. We believe we have a moral obligation to be fair and to put things right as quickly as possible when it goes wrong. We also accept and acknowledge the focus of this committee, the Minister for Finance and the Central Bank in this matter and holding us all to account. Ulster Bank has certainly learned lessons from this and, while we are still in the process of finalising our programme, we are applying these lessons across the bank.
Throughout this process, our people on the front line - helping customers and dealing with queries - have worked tirelessly, and that is despite how the public may feel about those of us at senior level. I would like to draw that distinction.
To close, I emphasise again that we are working to finalise our numbers. We will continue to engage with the Central Bank as regards a phase 2. While we expect some additional customers to be impacted upon, we do not expect the issues to be on the same scale. Despite this, we have failed. This has not only impacted on our tracker customers but society's trust in banks and, indeed, our credibility as an industry. We will continue to work hard to complete this programme, learn from it and rebuild trust in our bank. We are serious about our commitments to our customers and we are listening and learning from the experience of this programme. I thank the Chair and look forward to questions.
Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Chair. I welcome Mr. Stanley and Ms Arnett. Can I ask where is Mr. Mallon, the chief executive officer?
Michael McGrath (Cork South Central, Fianna Fail)
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However, Mr. Mallon is actually working? He is not on gardening leave?
Michael McGrath (Cork South Central, Fianna Fail)
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My understanding, of the precedent referred to, was that outgoing chief executive officer was not at work at that time. I will have to check that. I put it to the witness that he should be here. He is still the chief executive officer. He is the person who is accountable. We might look into that precedent issue.
Turning to the matters at hand, the tracker examinations, in the questionnaire, Ulster Bank says that in the region of 15 private dwelling homes, PDHs, may have been lost as a result of this issue. A phone is on. It is not mine. Mr. Stanley has said up to 15 homes have been lost as a result of being denied tracker mortgages by Ulster Bank. Will Mr. Stanley bring us up to date on those cases?
Michael McGrath (Cork South Central, Fianna Fail)
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They all have been contacted and there is engagement with all of them. Why does Mr. Stanley say "in the region of 15"? The wording is loose.
Mr. Paul Stanley:
I say that because these are PDH customers. We are continuing to work through our buy-to-let book to look at loss of ownership. There is the potential that a designation on an account that was originally buy-to-let may have become a PDH over the period to date, which would mean that it would fall into the PDH category. That is the reason we say 15.
Michael McGrath (Cork South Central, Fianna Fail)
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Has Ulster Bank identified any buy-to-lets thus far where people lost their homes?
Michael McGrath (Cork South Central, Fianna Fail)
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There are 15 PDHs and one buy-to-let.
Michael McGrath (Cork South Central, Fianna Fail)
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That is the current picture. I do not think any of us can begin to understand the trauma involved for people in losing their homes. How can that be put right? What is the bank's objective? What is it doing for those people, apart from giving them cheques for €50,000?
Mr. Paul Stanley:
To be clear, having recognised the loss of ownership issue, the €50,000 is an initial payment. Aside from that, we will do all of the standard remediation. We will look at how much they paid in overpayments, how much interest was overpaid, and the loss of value in the property value as well from when they lost the property compared to what it would be worth today. We will be doing our utmost to get them into other homes.
Michael McGrath (Cork South Central, Fianna Fail)
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Does Ulster Bank still own some of those properties?
Michael McGrath (Cork South Central, Fianna Fail)
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Were the other 15 court repossessions, voluntary sales or voluntary surrenders? How did they come back into the possession of Ulster Bank?
Michael McGrath (Cork South Central, Fianna Fail)
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The word "voluntary" is a complete misnomer in this context. If somebody voluntarily sells his or her home or voluntarily surrenders his or her home, it is with a gun to his or her head. It is to avoid going to court.
Michael McGrath (Cork South Central, Fianna Fail)
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Yes. Is the objective that these individuals and families will get another home?
Michael McGrath (Cork South Central, Fianna Fail)
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Will the one property the bank has be given back?
Michael McGrath (Cork South Central, Fianna Fail)
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On Ulster Bank's overall numbers, 3,500 customers have been identified as being impacted upon. Of those, 2,500 are still customers of the bank with active mortgage accounts. Redress and compensation have been paid to 1,200. Is that correct?
Michael McGrath (Cork South Central, Fianna Fail)
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I imagine that is 1,200 of the 2,500. It is 1,200 of the bank's existing customers?
Michael McGrath (Cork South Central, Fianna Fail)
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When will everyone be fully repaid?
Michael McGrath (Cork South Central, Fianna Fail)
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The end of June?
Michael McGrath (Cork South Central, Fianna Fail)
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Will that be achieved?
Michael McGrath (Cork South Central, Fianna Fail)
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Thus far, statements that have been made and pledges that have been given have not been honoured. Going back over the timeline of what was said here and what was said publicly, I think Ulster Bank is further behind in this process than any other main lender.
Mr. Paul Stanley:
I accept that we are further behind and I have tried to outline some of the complexities we face. We did need to meet our 1,000 commitment for the end of December. That was one of the targets we agreed with the Minister of Finance and the Central Bank. We are on track to achieve 2,500 for the end of this quarter and 3,500 then is our objective for the end of June.
Michael McGrath (Cork South Central, Fianna Fail)
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The aim then is 3,500 by the end of June. I received more emails and correspondence from Ulster Bank customers in the past week or so than I have from customers of other banks. I am sure other committee members are the same. They are all telling us their own stories. They are very frustrated; they are getting the pro formastandard letter rolled off the computer every 60 days. It is telling them nothing. When they ring the helpline, they are not getting any additional information. They are very frustrated.
Mr. Paul Stanley:
I accept that frustration. I have listened to a number of those calls as well coming into the helpline and I understand where those frustrations are at. However, we are working as hard as we can to meet the objectives in terms of numbers to close these 3,500 by the end of quarter two 2018.
Michael McGrath (Cork South Central, Fianna Fail)
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I do not detect any confidence that Ulster Bank have gotten to the bottom of this and that 3,500 is the final number. I do not get that sense.
Mr. Paul Stanley:
Our phase 2 report is with the Central Bank. There have been a number of queries back from the Central Bank in terms of that report. I would expect that we will know in the next few weeks what the final number is, particularly in view of the proactive engagement we have with the Central Bank in terms of those outstanding issues. We do not expect it to be anything like the 3,000.
Michael McGrath (Cork South Central, Fianna Fail)
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Are there cohorts or groups of customers not currently included in respect of which the bank is in some dispute or engagement with the Central Bank?
Michael McGrath (Cork South Central, Fianna Fail)
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The Central Bank may have a different view or different interpretation?
Michael McGrath (Cork South Central, Fianna Fail)
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It sounds like there are potentially other groups that Ulster Bank may conclude should be included?
Michael McGrath (Cork South Central, Fianna Fail)
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In what state are Ulster Bank's information technology systems? From reading Mr. Stanley's submission and looking at the history, I know the bank has had some unfortunate information technology glitches in recent years. It seems the bank's systems are in a bit of a mess.
Mr. Paul Stanley:
I should have been clearer on that. The five mortgage systems I referred to are legacy systems that existed over the period. We are down to two mortgage systems as of last year. That is a legacy problem but it does impact on pulling data out from the 2001 period. With two systems, we have far more robust and central information technology.
Michael McGrath (Cork South Central, Fianna Fail)
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As of now, systems are not the problem or the reason the process is taking so long.
Michael McGrath (Cork South Central, Fianna Fail)
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That was an issue but it is being dealt with now.
Michael McGrath (Cork South Central, Fianna Fail)
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Have the 1,000 customers who no longer are with Ulster Bank been contacted?
Michael McGrath (Cork South Central, Fianna Fail)
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Am I correct that of that 1,000, half of them have not been contacted yet by Ulster Bank?
Michael McGrath (Cork South Central, Fianna Fail)
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Why not?
Michael McGrath (Cork South Central, Fianna Fail)
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The impact on them is no less great than on current customers of Ulster Bank.
Michael McGrath (Cork South Central, Fianna Fail)
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Some of them may have switched to another provider and they could be arrears or may have lost their homes.
Michael McGrath (Cork South Central, Fianna Fail)
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I suspect that this has not been assessed in respect of those customers, given they have not yet been contacted by the bank. As stated by Mr. Stanley, the bank is unable to identify who they are, where they are or what state they are in.
Michael McGrath (Cork South Central, Fianna Fail)
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In regard to the 100 cases in respect of which the bank is having challenges, is the problem that the bank cannot find contact details?
Mr. Paul Stanley:
Yes. We are doing our utmost, using numerous channels, including third parties, to try to contact them. Ultimately, if we cannot contact them we will put whatever compensation or remediation we deem to be relevant to them in escrow for six years. There may be a small number of people who we will be unable to find but we will keep doing our utmost to find them.
Michael McGrath (Cork South Central, Fianna Fail)
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Of the 1,000 who are no longer customers of Ulster Bank, how many have received redress and compensation? Mr. Stanley mentioned earlier that the bank has contacted 500 of them.
Michael McGrath (Cork South Central, Fianna Fail)
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How many of the 1,000 who no longer are customers have had redress and compensation?
Michael McGrath (Cork South Central, Fianna Fail)
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Approximately 360 of the 1,000 people who are no longer customers of Ulster Bank have had redress and compensation.
Michael McGrath (Cork South Central, Fianna Fail)
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The remaining 500 need to be a priority for the bank. It is two years since the examination commenced in late 2015, and in the case of Ulster Bank, March 2016. We are now into February 2018 and 500 customers have not yet heard from the bank. That is not good enough.
Michael McGrath (Cork South Central, Fianna Fail)
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In regard to the customers who switched from Ulster Bank, how does the bank calculate redress for them? Is redress paid only up to the point at which they switched their mortgage?
Michael McGrath (Cork South Central, Fianna Fail)
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The differential in the interest rate between what they are currently paying and what should have been paying had they remained with Ulster Bank and retained their tracker mortgage is paid up to the end of the mortgage term.
Michael McGrath (Cork South Central, Fianna Fail)
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Okay. Where they are returned to a tracker mortgage, are the terms identical to the terms of their original mortgage contract?
Mr. Paul Stanley:
Any customer returning to Ulster Bank and wanting to take up a tracker will get a tracker rate that is either what they were on originally or the lowest rate they were on in terms of the tracker journey, from a margin perspective, because trackers moved somewhat over the timeframe involved. That is the basis on which we will bring them back.
Michael McGrath (Cork South Central, Fianna Fail)
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Can Mr. Stanley clarify the position in regard to former First Active customers?
Michael McGrath (Cork South Central, Fianna Fail)
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Am I correct that First Active merged into Ulster Bank in late 2009 and ceased trading in early 2010?
Michael McGrath (Cork South Central, Fianna Fail)
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Are former First Active customers affected and included?
Michael McGrath (Cork South Central, Fianna Fail)
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Does Mr. Stanley know the number of customers involved in this regard?
Michael McGrath (Cork South Central, Fianna Fail)
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So, those customers are being treated in the same way as everybody else.
Michael McGrath (Cork South Central, Fianna Fail)
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Is Mr. Stanley saying that their mortgages have been examined and if they had an entitlement to a tracker, that is now being vindicated?
Michael McGrath (Cork South Central, Fianna Fail)
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Does Mr. Stanley's evidence indicate that some were affected?
Michael McGrath (Cork South Central, Fianna Fail)
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I ask Mr. Stanley to provide the committee with the details of the number of the aforementioned 3,500 customers who were former First Active customers.
Michael McGrath (Cork South Central, Fianna Fail)
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Are any of those customers among the 16 who have lost their homes?
Pearse Doherty (Donegal, Sinn Fein)
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I welcome the witnesses. For the record, it is not acceptable that the chief executive officer of the bank has not appeared before the committee today. I note that the bank provided further information and its opening statement quite late yesterday. If all the other banks were able to provide the information when requested by the committee, Ulster Bank should have been able to do so. I welcome that despite the bank's reservations regarding appearing before the committee at this time, it nevertheless accepted the committee's request.
I wish to raise a number of issues. I acknowledge that we are only dealing with the tracker mortgage issue today and that we will have an opportunity on another day to discuss issues related to the global restructuring group, GRG, and the revelations that are being uncovered in respect of Ulster Bank's parent body in Britain. Hopefully, that will flow into a full investigation into Ulster Bank's activities here.
In regard to where Ulster Bank is at in terms of phase 2, the Central Bank is in dispute with Ulster Bank on the final numbers.
Mr. Paul Stanley:
I do not accept that we are in dispute. The Central Bank has asked for additional evidence and it has asked us to review a number of the policy judgments. In regard to all of the issues on which the Central Bank is calling out to Ulster Bank, we were very clear in our phase 2 report about the judgments made in respect of the cohorts concerned. We are not in dispute with the Central Bank.
Pearse Doherty (Donegal, Sinn Fein)
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The Central Bank is seeking additional evidence related to groups of individuals - cohorts - who may have been impacted. On how may different groupings is the Central Bank seeking additional evidence, documentation or assurances?
Pearse Doherty (Donegal, Sinn Fein)
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What is the number of customers that could be deemed impacted as a result of that process?
Pearse Doherty (Donegal, Sinn Fein)
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It is unbelievable that the bank is not focused on the number of customers impacted.
Ms Elizabeth Arnett:
By way of clarification, in looking at the policy decision around whether a customer is impacted, we did not look at how many customers might be contained within a group such that whether the number is two or 200,000, we would not know at this point because that is not relevant. Whether a customer is part of a large or a small group should not determine or influence whether we deem that person impacted. That is the methodology we have used in looking at these policy decisions. We look at the principle of the issue first to determine impact and then we look to see what are the numbers associated with that group of customers.
Pearse Doherty (Donegal, Sinn Fein)
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Has the Central Bank identified to Ulster Bank additional customers, which in its preliminary view are impacted but Ulster Bank has deemed not to be impacted?
Pearse Doherty (Donegal, Sinn Fein)
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Mr. Stanley states he expects additional impacted customers to be declared by the bank. He states he does not expect it to be on the same scale.
Pearse Doherty (Donegal, Sinn Fein)
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Are we safe in assuming we will not see the type of figures that have been mentioned in certain sections of the media, namely, potentially up to 3,000 additional impacted customers?
Pearse Doherty (Donegal, Sinn Fein)
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If a journalist was to carry a story tomorrow saying that the figure was expected to be 1,000, would that also be excessive?
Pearse Doherty (Donegal, Sinn Fein)
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But Mr. Stanley is not willing to say that it would be excessive?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Why will Mr. Stanley not discuss it?
Mr. Paul Stanley:
It is because we are still in discussion with the Central Bank regarding those areas. In fairness to us and the Central Bank, we need to conclude those discussions. As I have said, I expect those to conclude during the next few weeks and we will have no difficulty talking about it then.
Pearse Doherty (Donegal, Sinn Fein)
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The bank provided its phase 2 report to the Central Bank before the deadline of the end of March 2017.
Pearse Doherty (Donegal, Sinn Fein)
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So when did the Central Bank request additional information?
Pearse Doherty (Donegal, Sinn Fein)
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When did the bank provide the information?
Pearse Doherty (Donegal, Sinn Fein)
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And the Central Bank has not come back to Ulster Bank regarding any of those?
Pearse Doherty (Donegal, Sinn Fein)
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So there is an acknowledgement. If the Central Bank is of the view that there are additional cohorts, which is a horrible term because it really dehumanises all of this, of people who have been impacted by the bank, is that a decision or opinion that Ulster Bank will accept or is it something the bank may challenge?
Mr. Paul Stanley:
There may be elements that we may challenge or accept. We need to finish the dialogue with the Central Bank and let it consider the evidence we have given it because there were some shortages in evidence around a number of those issues. We will then conclude. We do not want to end up in dispute with the Central Bank.
Pearse Doherty (Donegal, Sinn Fein)
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Can Mr. Stanley inform the committee as to how the bank can make the statement that it expects this to conclude with a number of weeks? Has a timeline been put on this? If all the bank has received is an acknowledgement, how is the bank so sure that this-----
Pearse Doherty (Donegal, Sinn Fein)
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As of today, what is the accurate number of customers who have been given redress?
Pearse Doherty (Donegal, Sinn Fein)
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That is 1,214 over the period of January.
Pearse Doherty (Donegal, Sinn Fein)
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I understand that. What was the figure in December?
Pearse Doherty (Donegal, Sinn Fein)
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The bank has not even managed to pay back fewer than 200 people. The figure for the month of January was 193 people. Riddle me this. There are 200 people working full time on this issue and there are 31 days in January. Each one of them cannot even pay back one customer each. What Ulster Bank has achieved over the month of January is pathetic.
Pearse Doherty (Donegal, Sinn Fein)
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Come on.
Mr. Paul Stanley:
Let me finish. It is not the case that those staff members were just working on those 200 cases. They are working on the balance to get us to the 2,500 by the end of the first quarter, so work is being done on that concurrently. We have particular batch drops and times and we can fix things on the system, as I outlined in my letter. They have also been working on that. I can understand where the Deputy is coming from. A simple extrapolation of 200 says one will never get to 2,500 by the end of the first quarter but that is not correct because we have also been working on those other balancing customers.
Ms Elizabeth Arnett:
For clarity, the challenge for us is there is a high degree of variation within the population or the grouping we have, that is, the 3,500. Consequently, I would not judge the progress we make in February and March on the January progress because part of our focus was trying to resolve issues so that we can deal with larger-----
Pearse Doherty (Donegal, Sinn Fein)
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I am not judging the bank's progress. I never mentioned anything about February or March. I am saying that what Ulster Bank did with regard to customers, which it robbed, was pathetic. It took this money from their accounts illegally. It took this money from them. We have AIB telling us that it has 500 people working on this. Whatever the 200 people in Ulster Bank who were working on this in January were doing, the first port of call is to pay back these individuals. Ulster Bank's great achievement in January was to give 197 customers back their money. When did Ulster Bank first find out that these individuals were impacted by it? It is a beautiful word - a nice industry word. These people were robbed by the bank because it told us in December 2016 that it was aware that 2,000 people were impacted, or robbed, by the bank. It is not the case that Ulster Bank only found this out a couple of weeks ago and now has to do all the calculations and all the rest. As the bank knew from December 2016 that these customers were impacted, how are members supposed to accept that a bank regulated here by the Irish State is in such disarray that it cannot return money it wrongly possesses in its accounts to its customers at least a year and one month after knowing and admitting it wrongly held that money? Is that not the case? Ulster Bank knew for more that a year and one month that 2,000 customers had their money wrongly taken from them by the bank. As of today, the bank has not given back their money to 800 of them.
Mr. Paul Stanley:
The figures quoted by the Deputy are correct in terms of progress. For this quarter, we are focused on getting the 2,500 out. It is not the case that people have been sitting on their hands and have just been focused on the 197 customers we paid in January. They are also focused on getting the other two months ready and out the door as well. I accept fully that this has taken too long to do. Regarding the reasons for it, what I tried to outline in the letter was the complexity of what we are dealing with. People are working very hard and are fully aware of the difficulty this is creating for customers. They are fully aware of it. We want to solve this for both our customers and ourselves as quickly as possible. We have no interest in dragging this out. As the Deputy can imagine, it is costing us a lot of money to run all these processes internally. We need to fix it for our customers and ourselves as quickly as possible and that is where our focus lies.
Pearse Doherty (Donegal, Sinn Fein)
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But the customers do not believe Ulster Bank.
Pearse Doherty (Donegal, Sinn Fein)
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Deputy Michael McGrath talked about the letters he is getting from customers of Ulster Bank. I am the same, as I am sure are the rest of the committee members. The number of letters I get from Ulster Bank customers exceeds all of the letters I receive from other customers from all of the other banks combined. That the trend at which we are now looking because of the messing in which Ulster Bank is involved. It is not just about not paying back the customers. What about people who are putting in for their own data? What is the story there? There is a 40-day period during which the bank must provide with their data. Is that not the case?
Pearse Doherty (Donegal, Sinn Fein)
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No, Ulster Bank has the issue.
Pearse Doherty (Donegal, Sinn Fein)
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Of course, I have. They have contacted Ulster Bank. If the bank's chief executive officer, CEO, was present, he could actually respond because they have written personally to him time and again in cases where the data packs are not being provided. The customers have raised this with the Data Protection Commissioner. Has the Data Protection Commissioner contacted Ulster Bank regarding the bank's failure to abide by the law with regard to this matter?
Pearse Doherty (Donegal, Sinn Fein)
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Is Ms Arnett aware of this?
Pearse Doherty (Donegal, Sinn Fein)
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I could read out letters about how people are being moved from pillar to post about accessing their data with Ulster Bank. It seems that the bank is a shambles. It cannot get to grips with this. Mr. Stanley's apology and excuse for this earlier on was that when the Central Bank wrote to it in 2015, Ulster Bank sat on its hands for a couple of weeks and had a wee yarn with itself about how it would respond and that is why it lost so much time and is so far behind the other banks.
Pearse Doherty (Donegal, Sinn Fein)
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Mr. Stanley told us in December 2016 that between 14 and 15 individuals lost their private dwelling homes, PDHs. Since then we know that the bank has identified another 1,500. The figure for home loss, however, has not increased despite that increase of 1,500. Is Mr. Stanley satisfied that of the 3,500 that is the number of individuals who have lost their homes?
Mr. Paul Stanley:
We are now looking at buy-to-lets. That is the figure for PDHs, as the Deputy rightly says. A property already designated as a buy-to-let may now be a PDH in a loss of ownership circumstance. That is the only caveat I would put on that. We have gone through the PDH portfolio as we have designated it and those are the cases we have arrived at.
Pearse Doherty (Donegal, Sinn Fein)
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Did any of the 15 whose homes the bank took lose their homes after the Central Bank wrote to Ulster Bank about the examination in 2015?
Pearse Doherty (Donegal, Sinn Fein)
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The Central Bank formally wrote to the bank about the examination in December 2015; did any individual lose their home subsequent to that date?
Pearse Doherty (Donegal, Sinn Fein)
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Did the bank issue any letters to the affected customers during that period suggesting that voluntary surrender would be their best option?
Pearse Doherty (Donegal, Sinn Fein)
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Customers are taking two legal challenges against the bank, which I presume it is going to defend robustly.
Pearse Doherty (Donegal, Sinn Fein)
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The bank states these are people who have been denied a tracker mortgage. Does the bank still believe they were not entitled to a tracker mortgage or are they people who were deemed to have been affected but may not be satisfied with the redress offered?
Pearse Doherty (Donegal, Sinn Fein)
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There are two legal cases where a customer is claiming the right to a tracker. That would sound to me as if the bank is of the view that they do not have a right to a tracker. Is that the case or does the bank want to clarify that first?
Pearse Doherty (Donegal, Sinn Fein)
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Does Mr. Stanley believe that his bank broke the law?
Mr. Paul Stanley:
In the 3,500 cases we have reviewed, the issue has been ambiguity of documentation. It has been operational errors where different wrong rates were keyed in and some of the customer protection code, CPC, warnings required were not given. We are putting a customer lens on this in respect of remediation. Our core volume was around the use of an ambiguous term, home loan rate, and reverting to a home loan rate, and the contractual view is that the law was not broken but that is not the issue here. The issue is that it was ambiguous from a customer perspective and created an expectation that they could revert to a tracker.
Pearse Doherty (Donegal, Sinn Fein)
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That is a "No", is it?
Pearse Doherty (Donegal, Sinn Fein)
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It actually is the issue for many people because it goes to the heart of accountability too. AIB came before us yesterday and said it denied their customers’ their legal rights. It is clear it broke the law. It also said that there was ambiguity and all the rest but there were black and white issues there. Is Mr. Stanley telling me that in Ulster Bank there are no black and white issues?
Pearse Doherty (Donegal, Sinn Fein)
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Mr. Stanley is claiming today that everything the bank has done has been legal.
Pearse Doherty (Donegal, Sinn Fein)
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That is Mr. Stanley's opinion.
Pearse Doherty (Donegal, Sinn Fein)
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I know that is the legal advice but is that Mr. Stanley's opinion?
Pearse Doherty (Donegal, Sinn Fein)
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The bank has made provision for €211 million. Does Mr. Stanley believe there will be any accountability – I am nearly laughing as I ask this question because I know this is not going to happen because accountability within the bank is bizarre but I will ask it anyway: does Mr. Stanley expect any accountability within the bank? Does he expect the bank to try to figure out why this happened, why so many people were affected, why the bank took people's houses from them, why it destroyed people's lives? I could read an email I got from a customer which is horrific. It speaks about, in their words, being "harassed" by Ulster Bank because they were falling into mortgage arrears. They were brought in by Ulster Bank and questioned about the amount of money they were spending on hospital charges to visit their dying mother, it speaks about the problems in their personal life in terms of mental stress and taking medication as a result of all this. This is the responsibility of Mr. Stanley's institution. Will there be any accountability?
Mr. Paul Stanley:
There is an accountability review in progress. As the Deputy is aware there is an enforcement action from the Central Bank in progress, not just for this but there is a normal process that the bank would go through that would result in appropriate sanctions against individuals concerned if they are deemed to be relevant.
Pearse Doherty (Donegal, Sinn Fein)
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Mr. Stanley is arguing that the bank was within the law and it was just a big of vagueness and all the rest.
Pearse Doherty (Donegal, Sinn Fein)
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The bank's information technology, IT, system is in a shambles. The Minister for Finance told us in response to my questions that its IT shambles is the reason Ulster Bank is not able to repay customers it wrongly took money from. I asked the Governor of the Central Bank, Philip Lane, is it the case that Ulster Bank's IT system is so bad that this is the problem and he said yes that is the case. The bank's IT system had a glitch which locked its customers out of basic banking services for weeks on end.
The bank paid a dividend two days ago of €1.5 billion to its parent group at the same time that its IT systems are in such a shambles that it cannot pay back money it took wrongly from customers' accounts over a year later. Would it not fit it better to tell NatWest and Royal Bank of Scotland, RBS, no, actually we are not paying a dividend, we have a duty and responsibility of care to our customers here in Ireland and we will invest that to make sure this will never happen again and that we have robust systems?
Pearse Doherty (Donegal, Sinn Fein)
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Of course Mr. Stanley can.
Mr. Paul Stanley:
As I said earlier, the issue is with legacy systems that are no longer there. We had five mortgage systems and that is the complexity of going back into systems that are closed down, extracting the information and rebuilding customer files. We now have two and in effect most mortgages are on one. That absolutely has been a challenge of the past. It is not there today. During the course of 2017 we completed that migration and we now have only two mortgage systems.
In terms of investment in systems, those are RBS's systems, not Ulster Bank systems per se. RBS invests €1 billion a year in IT and systems upgrades and we are the beneficiaries of that.
It is happening both in our mortgage systems and our mortgage processes, and indeed other investments across the bank.
I will conclude by commenting on the dividend, which was also raised. Ulster Bank is excessively capitalised at this point. That, as the Deputy is aware, is taxpayers' money that came in from the UK, and was needed, in order to capitalise the bank. The European Central Bank, ECB, our own Central Bank, and indeed our own parent company, are quite comfortable with the view that it was appropriate to make that dividend. We remain the most capitalised bank within the Republic of Ireland, certainly the most capitalised of the main banks. That is why the dividend was repaid. Investment continues to take place in our system.
Rose Conway Walsh (Sinn Fein)
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I thank the witness for his presentation and opening statement. It is absolutely disgusting that Mr. Gerry Mallon is not here today. This is a scandal for which Ulster Bank has had to make a provision of €211 million, yet he does not see fit to come before the committee to answer questions. He should consider changing the bank's name from "Ulster Bank" to "Ambiguous Bank". It is hard to even ask intelligent questions. There is so much fudge around when everything happened or did not happen. I find it absolutely exasperating that he is not before us today, benefiting as he is from the bank. I will try to confine my questions, but as others have said, we get more letters from Ulster Bank customers than from those of all the other banks combined, and that is not by accident. There is nothing ambiguous about that.
We must also remember that in December 2016, Ulster Bank promised that all customers would be written to by the end of the year. Perhaps Ulster Bank did write to them. I will give the witnesses an example of one customer. Since January 2016, he has received the same letter over and over again. I laughed earlier when Ms Arnett referred to a "high degree of variation". There certainly is not a high degree of variation in Ulster Bank's contact with these customers. I do not accept that the degree of complexity prevents Ulster Bank from communicating effectively with its customers, because some of these calculations can be made by the homeowners themselves, as indeed they have been. These are customers who are paying 3.75% interest as things stand. They know they have overpaid by, say, €300 a month over ten years, so they know the overpayment amounts to €30,000. They know that is what is due to them, compensation aside. As such, it is extremely frustrating for us and for them to see that we are here two years later. They are still opening their envelopes, getting the same thing over and over.
There are so many contradictions in what the witnesses say about the way they treat customers. Mr. Stanley's opening statement claimed:
"The letters we write to customers are designed to complete a picture for them. In some cases these can contain up to 30 pages but they also include a summary. They contain a full financial statement going back to the month when the impact happened and provide a month by month statement for the years the impact happened."
Very good. However, that is not what customers are telling us.
Rose Conway Walsh (Sinn Fein)
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How many appeals have been launched against Ulster Bank on foot of the letters that have been sent?
Rose Conway Walsh (Sinn Fein)
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Out of how many?
Rose Conway Walsh (Sinn Fein)
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That is a very high number, is it not? People who are obviously not-----
Rose Conway Walsh (Sinn Fein)
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It is not as high as that elsewhere, and that reflects the assessments that Ulster Bank is making in offering redress and compensation. Getting back to the data issues, Ulster Bank has already been in trouble with the Data Protection Commissioner for seeking data from customers, has it not?
Rose Conway Walsh (Sinn Fein)
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This concerns the tracker issue. Has Ulster Bank been contacted by the Data Protection Commissioner?
Rose Conway Walsh (Sinn Fein)
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Ulster Bank has not been contacted?
Rose Conway Walsh (Sinn Fein)
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To the best of my knowledge, It has been contacted.
Rose Conway Walsh (Sinn Fein)
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It seems to me that this is not a fair process, considering what Ulster Bank is asking of its customers and what its customers are asking of the bank. When customers ask for their own data, the bank does not give it to them. Instead the bank blames the system, as has happened in this hearing. Ulster Bank hides behind its systems when accounting for the period when customers had to endure having their money taken, and now it refuses to give that money back, or delays in doing so. Justice delayed is justice denied, as far as I am concerned. My colleague outlined some of what these families are going through. They have been hounded and persecuted by the banks and by Ulster Bank, and the CEO does not even see fit to come before us. It is so frustrating. When will the new CEO be appointed?
Rose Conway Walsh (Sinn Fein)
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I will not ask any more questions about it. I appeal to the witnesses to stop missing these deadlines and to treat customers with respect. They cannot simply apologise to customers for the way they have been treated. I am talking about the way customers continue to be treated.
Rose Conway Walsh (Sinn Fein)
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It is not even a question of accepting their claims. I call on the witnesses to communicate with their customers. They are telephoning a call centre in Belfast. They are being told that staff do not know about the issue, and instructed to go back to Dublin. The bank does not know. Nobody knows. Nobody is responsible. Mr. Stanley said that 200 people work on this programme full-time. Of that 200, how many are in the call centre in Belfast?
Rose Conway Walsh (Sinn Fein)
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Can the witnesses empower them to make decisions and to communicate in a humane way and clear way? I do not want to hear the word "ambiguous" again. That is what has led us into all of this in the first instance. From today, we need to see a marked change in the way customers are treated. The proof of the pudding will be in the eating, not in what Mr. Stanley says.
Rose Conway Walsh (Sinn Fein)
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Can Mr. Stanley explain the difference between transparency errors and operational errors?
Mr. Paul Stanley:
Transparency errors, which account for the bulk of our 3,500 impacted customers, arose where we used certain terminology, saying that when a customer came off a fixed rate they would go back to the bank's variable home loan rate. What did that home loan rate mean? Customers who were on trackers interpreted it as being the tracker rate. Customers who were on a variable rate interpreted it as being a variable rate. That is the ambiguous language.
Operational errors involved the wrong rate being keyed in through error. Instead of a tracker rate of 2.75%, it was recorded on the system as either 2.5% or 3%.
Rose Conway Walsh (Sinn Fein)
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Nobody picked up any of these errors along the way. I raised it with Bank of Ireland the other day. None of the banks' legal teams, none of their senior executives-----
Rose Conway Walsh (Sinn Fein)
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It is an absolute insult to Irish citizens and to customers to describe these as errors. They certainly were not errors.
Rose Conway Walsh (Sinn Fein)
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There would be a very small amount of human error.
Rose Conway Walsh (Sinn Fein)
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That was not an error. I thank the witness.
Paul Murphy (Dublin South West, Solidarity)
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It is clear that in many cases Ulster Bank has abused its customers not once, not twice, but three times. It first robbed them of the tracker rates to which they were entitled, second, it harassed some of those people when they fell into arrears, and third, even compared to other banks, it has been dragging its feet in providing appropriate compensation and redress, which is an ongoing abuse. I have quite simple questions. Approximately how much money did Ulster Bank benefit from as a result of denying customers their right to tracker mortgages or correct rates?
Mr. Paul Stanley:
In respect of the €211 million provision that is in place, approximately a third is for the costs of running the programme and the balance is for compensation and remediation. The compensation piece would not have been part of money Ulster Bank made, but the balance would be. I do not know the exact breakdown of it, but that would give the Deputy a flavour of it.
Paul Murphy (Dublin South West, Solidarity)
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Would it be in the region of €100 million?
Paul Murphy (Dublin South West, Solidarity)
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Why does Mr. Stanley think this happened in the first place? Why were people taken off tracker mortgages or their correct rates?
Mr. Paul Stanley:
It was due to a combination of factors. One is that the economic circumstances which the banking industry and the country were going through back in 2008 meant that the tracker product was loss-making. Banks will take products out of their ranges at any point in time. In taking these products out of their ranges, I do not believe sufficient consideration was given to the implications for customers who might have come off a tracker and onto a fixed rate and for other such instances. That is what I believe happened.
Paul Murphy (Dublin South West, Solidarity)
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Mr. Stanley has similar beliefs to the witnesses from Bank of Ireland and AIB. They have similar stories. A commercial decision was taken on the offer of a tracker and that had-----
Paul Murphy (Dublin South West, Solidarity)
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Those knock-on effects were unidentified in advance of the decision.
Paul Murphy (Dublin South West, Solidarity)
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I find it hard to believe that Ulster Bank and the other banks did not anticipate that knock-on effect or, indeed, want it. Is Mr. Stanley aware that there was tension in the mortgage centre among the staff who were working on tracker mortgages and that the staff at ground level were put under pressure to not allow people back on to trackers and to get people off them? In some cases that I am aware of there were disputes. The union was involved. Staff members only agreed to do it on the basis of putting a note on the system which said that management had instructed them to do so.
Mr. Paul Stanley:
I am not aware of that. It was before my time. To be clear, as far as I have been able to determine, there is no evidence that there was any systematic or coherent effort to move people off trackers. If one looks at when people moved off trackers, it was generally during periods of high interest rates when it was cheaper to have a fixed rate than a tracker rate. That is where the difficulty and challenges occurred.
Paul Murphy (Dublin South West, Solidarity)
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I suggest that Mr. Stanley investigate that because it indicates that staff were uncomfortable with what they were being asked to do. It also indicates that they had a better ethical approach than the management which was driving this process.
Paul Murphy (Dublin South West, Solidarity)
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It is quite a coincidence that Ulster Bank took advantage of what it now says was an ambiguity in the terms given to people on tracker rates and that the other banks did so at the same time. Was there any communication between Ulster Bank and other banks on this issue?
Mr. Paul Stanley:
I can only speak for myself, but there was none that I was aware of. In our case many of these instances were customers going on to fixed rates and then not reverting to tracker rates. Even before tracker rates came into existence the standard market practice was that when customers came off a fixed rate, if they did not choose another product, they would revert to the standard variable rate. There was probably an over-reliance on that standard practice.
Paul Murphy (Dublin South West, Solidarity)
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It just so happens that this standard practice, this ambiguity and this failure to think through knock-on effects had a positive effect on the bank to the tune of €100 million. We are expected to believe that it just so happened that the situation benefited the bank to the tune of €100 million and that nobody thought it through. Does Mr. Stanley understand how I find that hard to believe, even though my opinion is not as important as that of the customers harassed by Mr. Stanley's bank?
Paul Murphy (Dublin South West, Solidarity)
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They were right. Mr. Stanley has accepted that they were right. They did have a right to revert to a tracker rate.
Kieran O'Donnell (Fine Gael)
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I welcome Mr. Stanley and Ms Arnett. Like my colleagues, I think it is reprehensible that Mr. Mallon did not appear today. We have been pursuing Ulster Bank to come before the committee for many weeks. The bank did everything in its power to ensure that it did not. We have a body of work to do and now we find that the bank has arrived in without its CEO. This is not personal, it is just that the buck stops with the CEO. Mr. Mallon should have been here today. I want to put that on record. The bank has come in here kicking and screaming. It has not come in of its own accord. We have a duty to the public, and in particular to the tracker mortgage holders - the victims - who got caught up with many of the institutions, including Ulster Bank.
I just have a few quick questions. What is the total figure the 1,214 customers who have been redressed and compensated at this stage have received? How is it broken down between redress and compensation?
Kieran O'Donnell (Fine Gael)
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The figure was 1,200 by the end of 2017.
Kieran O'Donnell (Fine Gael)
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How does that figure break down into redress and compensation?
Kieran O'Donnell (Fine Gael)
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So the figure is €23 million in total, is that correct?
Kieran O'Donnell (Fine Gael)
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Is €18 million the figure for redress and €5 million the figure for compensation?
Kieran O'Donnell (Fine Gael)
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I mean no disrespect to Mr. Stanley, but he knew he was coming before the committee today. That figure relates to a question which was obviously going to be asked. I do not think it is reasonable for him to come in without having that figure to hand.
Kieran O'Donnell (Fine Gael)
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There are 1,200 customers. The problem is that the money Ulster Bank is refunding to people is not the its money; it is the tracker mortgage holders' money.
Kieran O'Donnell (Fine Gael)
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They should not have to beg for it. We have been consistent with all the banks. I have no doubt but that the witnesses have watched the committee's proceedings with great interest. We have sought the total amount that has been paid to date, which the witnesses have given, and a breakdown of that amount in numerical and value terms between compensation and redress. The witnesses have come here without that figure. I will not put that down to a schoolboy error because it is not; I can only think it is deliberate.
Kieran O'Donnell (Fine Gael)
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We have asked this consistently of all the banks that have come before us. It is a question the tracker victims and the public looking in are asking. They want to know what percentage is being paid in addition to the redress and compensation. Can Mr. Stanley give me an idea-----
Mr. Paul Stanley:
I can. Members have the figure we have just spoken about in the annexe I sent back to the committee. The average compensation amount for a PDH is approximately €3,000. For buy-to-let it is a little lower - €2,000. However, I very much caution the Senator that we have not completed the process. In effect, that figure is only for the 1,200 customers I spoke about earlier. That is too small a group to say that is the overall figure. As I said, we need to get to the overall amount out of the €211 million that is applicable to customers, so I-----
Kieran O'Donnell (Fine Gael)
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Of the 3,500 customers the bank has identified, 1,200 represents 35%. It would be interesting to see what percentage it is paying-----
Kieran O'Donnell (Fine Gael)
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What is the highest amount the bank has paid?
Kieran O'Donnell (Fine Gael)
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The breakdown between the redress and compensation for that-----
Kieran O'Donnell (Fine Gael)
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That person lost his or her home.
Kieran O'Donnell (Fine Gael)
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I will move on to a matter Mr. Stanley touched on earlier. It was reported towards the end of last year that there was a dispute between Ulster Bank and the Central Bank. Between 2,000 and 3,000 additional tracker mortgage holders might be impacted upon by this scandal. Can Mr. Stanley tell me where this matter stands? What is the profile? What is the area of dispute regarding these 2,000 to 3,000 customers on top of the 3,500? It could be virtually double the original figure.
Mr. Paul Stanley:
First, we are not in dispute with the Central Bank. The Senator missed the earlier part of our discussion. The Central Bank has asked for extra evidence and asked us to look at a number of policy areas again. These were judgmental areas in terms of whether cohorts or elements of customers were in or out. I ask the Senator to let me finish because he missed the earlier part of the session. I expect that to be resolved in the next few weeks. I also said I would not talk about specific numbers here, but we do not see them on the scale of the 3,500 we have already identified under phase 2.
Kieran O'Donnell (Fine Gael)
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Does Mr. Stanley see a much lower-----
Kieran O'Donnell (Fine Gael)
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We had representatives from Bank of Ireland before us a number of days ago. Bank of Ireland stated that 6,000 of its customers were in similar discussions. In a number of those cases, the areas of discussion that arose before the new CEO was appointed concerned the fact the mortgages were taken out before the consumer protection code was introduced in 2006.
Kieran O'Donnell (Fine Gael)
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That is not an issue-----
Kieran O'Donnell (Fine Gael)
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Ulster Bank will therefore treat them consistently regardless of whether they took out their mortgages before or after the introduction of the code.
Kieran O'Donnell (Fine Gael)
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I assume this cohort is coming down to interpretation of individual agreements, that that is the range.
Kieran O'Donnell (Fine Gael)
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Mr. Stanley is stating that there will be new-----
Kieran O'Donnell (Fine Gael)
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How long before that group of victims who had tracker mortgages will be paid and compensated?
Mr. Paul Stanley:
That will depend on the final conclusions with the Central Bank. I cannot comment on the timelines on that until we have concluded our discussions but, whatever we end up with as part of those discussions, we want to get it finished as quickly as possible. Can I guarantee that those increments will be done by the end of the second quarter of 2018, in respect of which we are working on the 3,500? No, I cannot until I go through the detail of them.
Kieran O'Donnell (Fine Gael)
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Is it fair to say that of the 3,500 customers, 1,214 have been paid and compensated to date?
Kieran O'Donnell (Fine Gael)
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Has Ulster Bank previously given timelines for the others? I have just said that the balance of 2,300 would be paid by the end of June of this year.
Kieran O'Donnell (Fine Gael)
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Of the 3,500 Ulster Bank has identified, 1,200 have been paid. That leaves the bank a balance of 2,300.
Kieran O'Donnell (Fine Gael)
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Regarding the other group that has been identified, when does Mr. Stanley anticipate that?
Kieran O'Donnell (Fine Gael)
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I know what Mr. Stanley is saying but I would have thought people were entitled to some indication as to when they will be paid and compensated.
Kieran O'Donnell (Fine Gael)
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If Ulster Bank concludes those discussions by, say, the end of February, that leaves the bank with March, April, May - four months to the end of June. Can Ulster Bank bring a conclusion to this for the people affected?
Mr. Paul Stanley:
I cannot get into that because our priority is dealing with what we know at this point, which is the overall 3,500 customers as part of phase 2, which is not to say any other customers affected are not also a priority. The challenge will be to get what we have committed to out the door and to get anything that might be incremental on top of it. When we have confirmed what we have to deal with, we will commit to the appropriate timelines.
Kieran O'Donnell (Fine Gael)
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Why is it taking so long? Mr. Stanley keeps going on about legacy systems and so forth. Why are we here today having to tussle with him to extract what is basic information? If the roles were reversed and I were the customer and he were the banker pursuing me for my mortgage, I do not think he would be as civil, and that is the core of the problem. The ordinary person out there is saying the banks will always be banks. People expected to see change when the crisis came. Ulster Bank was bailed out by its parent company in the UK but it has a large body of Irish customers. It made a substantial contribution in the farming sector, it pioneered in the SME sector and it went into small towns.
With the level of money involved, why have banks eroded that goodwill with customers and the general base? Mr. Stanley might put that in context.
On the tracker mortgages and the years when overcharging was taking place, how much did the banks benefit in terms of the bottom line? Mr. Stanley is the chief operations officer. How much did the bank benefit in terms of its profit and loss on an annual basis?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Stanley has the figures so please answer it again.
Mr. Paul Stanley:
In terms of an estimate, €211 million is our provision that we have in place. Some 30% of that is for costs of the projects. Some of the banks put them in; some other banks do not. We are talking about €170 million or €180 million of which compensation - the banks did not benefit from compensation - will be an element of that. The rough estimate would be in the €100 million to €120 million range.
Kieran O'Donnell (Fine Gael)
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Can Mr. Stanley explain why-----
Kieran O'Donnell (Fine Gael)
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-----it has taken this long? Why are we having to pursue the banks? If Padraic Kissane and his tracker victims had not come in here, what would have happened? It was the human story that opened the lid fully. Why are the banks behaving like this when it is eroding goodwill? In the scheme of things for the overall banking system, the sum is not enormous. Why are they doing that?
Mr. Paul Stanley:
I accept the point that the tracker mortgage process and examination has eroded significantly the goodwill of customers, certainly those customers impacted during the period. We are endeavouring to fix that. I will not go back to the complexities of systems again; I have already done it.
Kieran O'Donnell (Fine Gael)
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I am not asking Mr. Stanley to do that.
Mr. Paul Stanley:
We are dealing with customers now and if we take loss of ownership customers in particular, we are trying to do right by them. It is not easy, and they have had an horrific time in terms of what has happened to them. We are engaging with Mr. Kissane and others as part of that process to try to have an engagement that is as helpful to the customers as possible. That is part of trying to rebuild. Trying to rebuild trust in the industry again is a long journey.
Kieran O'Donnell (Fine Gael)
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Does Mr. Stanley believe Ulster Bank owes an apology to the tracker mortgage victims?
Kieran O'Donnell (Fine Gael)
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I thank Mr. Stanley.
Rose Conway Walsh (Sinn Fein)
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Can I clarify an issue? There is lengthy correspondence between Ulster Bank and the Data Protection Commissioner about Ulster Bank's request for excessive information. Mr. Stanley will be aware that information has to be adequate, relevant and not excessive and the Data Protection Commissioner found that the information the bank was asking for was excessive. I refer to September 2016.
Rose Conway Walsh (Sinn Fein)
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No, into new customers.
Rose Conway Walsh (Sinn Fein)
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Obviously, that is the ethos of the bank. I just want to clarify that.
Gerry Horkan (Fianna Fail)
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Mr. Stanley was trying to not come in today, 1 February, because of the closed period-----
Gerry Horkan (Fianna Fail)
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-----or suggested he could not come in, even though every other bank was reasonably willing to come in during the same closed period. All the banks have very similar closed periods in that all of them have December year ends.
Gerry Horkan (Fianna Fail)
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As a result of our exchange this morning, it is clear why Mr. Stanley did not want to come in on 1 February. It is because it is hoped a lot more progress would be made by 1 March, 1 April or whenever he would come in again. Of all the banks we have heard from so far, and Mr. Stanley has acknowledged this, Ulster Bank is clearly the furthest behind.
Gerry Horkan (Fianna Fail)
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Is every account being examined? In terms of the difference between the 3,500 and the final number, are the only accounts being examined those that are with the Central Bank for robust discussion between Ulster Bank and the Central bank as to whether they are in or out?
Gerry Horkan (Fianna Fail)
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Three hundred and ten thousand. We got that.
Gerry Horkan (Fianna Fail)
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All 1,600 of them or whatever it was.
Gerry Horkan (Fianna Fail)
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It is fair to say, therefore, that 3,500-----
Gerry Horkan (Fianna Fail)
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-----are definitely confirmed and there is another potential percentage in terms of the other 3,500. Mr. Stanley expects the figure not to be as big as 3,500-----
Gerry Horkan (Fianna Fail)
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-----but he will not say anything after that.
Gerry Horkan (Fianna Fail)
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It is difficult, therefore, for us to ask questions. I accept Mr. Stanley cannot talk about closed period matters but I am not asking about closed period matters. Mr. Stanley is here to talk about tracker mortgages-----
Gerry Horkan (Fianna Fail)
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-----and it is very unfortunate that he is not willing to give us a bit more detail on the actual numbers.
Gerry Horkan (Fianna Fail)
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At the same time, Mr. Stanley has a provision in his accounts at 31 December 2016 of €211 million.
Gerry Horkan (Fianna Fail)
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Does he expect that to be sufficient to cover potentially up to 7,000 cases?
Gerry Horkan (Fianna Fail)
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Mr. Stanley cannot tell us that.
Gerry Horkan (Fianna Fail)
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Touching on Senator Kieran O'Donnell's questions, the 1,214 people who have been paid out are the only people on which we can have absolute certainty in terms of the figures. Are the 2,396 who are not yet paid out tied down in that Ulster Bank knows the cost per customer of each of those ones?
Gerry Horkan (Fianna Fail)
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No. On the difference between the 3,500 that are confirmed, 1,214 are paid out but 2,396 or thereabouts are not paid out. Of the 2,396 that are not paid out, is there certainty in Ulster Bank's books regarding the amounts that are payable to those people?
Gerry Horkan (Fianna Fail)
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The averages mentioned in Appendix 1 for compensatory redress only relate to the 1,200 that are paid out-----
Gerry Horkan (Fianna Fail)
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-----not the balance of 3,500?
Gerry Horkan (Fianna Fail)
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We are still looking at only a very small percentage of what potentially is the impact on customers. I accept it probably will not be a full 7,000.
Gerry Horkan (Fianna Fail)
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It is somewhere between 3,500 and 7,000. We are looking at only 1,200. Mr. Stanley mentioned one case of loss of a home worth €300,000. Is that the highest-----
Gerry Horkan (Fianna Fail)
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To date. Are there others in that general region?
Gerry Horkan (Fianna Fail)
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Even in excess of the €300,000 case?
Gerry Horkan (Fianna Fail)
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Of the 1,214 that are paid out, how many are over €100,000?
Gerry Horkan (Fianna Fail)
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It is becoming more clear all morning that there is a lack of data and information. Bank of Ireland and AIB have been before the committee. I am sure Mr. Stanley's team has been able to look at the questions we asked them and they were able to give us a lot of detail Mr. Stanley is not in a position to give us, and it is a much smaller sample.
Gerry Horkan (Fianna Fail)
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I have been here all morning so I have heard about legacy systems and so on.
Gerry Horkan (Fianna Fail)
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I accept that but 1,214 cases are paid out and it would have been very useful for us, even if they were the easiest cases, to get some indication on those because if I was an Ulster Bank customer impacted by this, I would be very concerned that I would get my money back by June based on what we have heard this morning because it seems, and Mr. Stanley has admitted it, that Ulster Bank has a lot of technology issues to resolve.
Gerry Horkan (Fianna Fail)
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From previous systems.
Gerry Horkan (Fianna Fail)
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It would be useful if Mr. Stanley were to come in again relatively soon to update us on the progress and give some confidence to the people involved that they will get somewhere-----
Gerry Horkan (Fianna Fail)
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-----because I do not believe we can leave it as long based on the fact that we have not been able to get all the information. The more information we have, the more we can give some reassurance to customers. Based on what we have heard this morning, I do not believe that the people watching these proceedings this morning will be overly reassured that they will have everything by June.
Deputy Jack Chambers e-mailed me about a particular constituent who says that some Ulster Bank switcher customers have received a cheque for the amount they overpaid from the date they were wrongly removed. They say they are currently going through the procedures but that many other Ulster Bank switcher customers have not even received the courtesy of a confirmation that they are impacted and will be dealt with in due course. The customer has a list of questions including why Ulster Bank switcher customers have not received written confirmation that they are impacted under the process, if everybody will receive confirmation that they are impacted, and, if they are impacted, by when will they receive it.
Mr. Paul Stanley:
For Ulster Bank to confirm to the residual customers whether or not they are impacted, we must conclude our phase two discussion with the Central Bank. It would be wrong of me to say that because someone is not among the 3,500, they are not impacted. That is the immediate challenge we face. After that we can be quite clear with customers about who is or is not impacted.
Gerry Horkan (Fianna Fail)
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In relation to those 3,500, and I accept what Mr. Stanley said that it will probably not be that many, when will they know one way or another?
Gerry Horkan (Fianna Fail)
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How long will it take between when the bank knows and the customers know?
Gerry Horkan (Fianna Fail)
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Will that be two, three, four, six weeks?
Gerry Horkan (Fianna Fail)
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I accept that but if the bank has a database, and the Central Bank sends it an Excel sheet regarding 3,500 customers, even with that many customers, the bank could use mail merge to let people know if they were impacted or not and that the bank will contact them in due course.
Gerry Horkan (Fianna Fail)
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It is very unfortunate that a CEO who has six months left in that position is not before the committee. Mr. Stanley is getting the brunt of what he would probably get. It would have been to Mr. Stanley's benefit if he was here. My understanding is that Richie Boucher was either on holidays or was going within a very short number of weeks, after a very long time in the bank. Mr. Stanley has told us that this individual will be there for a further six months. This meeting has not been half as helpful as it might have been had he been here and if we had much more data on the 1,200 or 1,400 customers. The fact that the 1,200 or 1,400 is around one third of the confirmed customers paid is far behind everyone else, which Mr. Stanley has confirmed.
I do not have much more to raise here because it has all been covered already. In view of the closed period issue and lack of data, I do not have much more to raise.
Paddy Burke (Fine Gael)
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I welcome Mr. Stanley and Ms Arnett. The bank's complaint handling centre received a letter from a customer in January 2016, over two years ago. The letter thanks the customer for their letter of 23 January and tells them that the bank is currently working through the Central Bank requirements and will continue in due course if this customer's case falls within the scope of those requirements.
It is quite obvious that the Central Bank was working with Ulster Bank before 2016. This point follows on from Senator Horkan's comments. The Central Bank was working with Ulster Bank prior to 2016, so we are talking about 2015 and the requirements of what they would agree. The letter says the bank will contact the customer in due course if their case falls within the scope of those requirements.
Paddy Burke (Fine Gael)
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Yes, it relates to tracker mortgages. Mr. Stanley has said the bank is still in contact with the Central Bank. Is the Central Bank changing its requirements which are needed to arrive at the final scope on a weekly basis?
Mr. Paul Stanley:
My previous response was not clear. We are clear about the 3,500 customers whose cases we came here this morning to discuss. We have had several challenges back on our phase two report on which we hope to close with the Central Bank in coming weeks. That will allow us to be clear on what customers are or are not impacted. We will commit to communicating with all customers who are impacted at that point.
Paddy Burke (Fine Gael)
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I take on board what Mr. Stanley says but the Central Bank has been dealing with Ulster Bank on this matter for almost three years. Is the problem that the Central Bank is moving the goal posts?
Paddy Burke (Fine Gael)
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How is it that we cannot get to a situation where there is a final agreement and the bank can write to everybody? The bank cannot write to everybody until it has the final requirements from the Central Bank. It has taken almost three years to get those. Why is that?
Mr. Paul Stanley:
I will not go over the length and complication of the process. We submitted our phase two report in March 2017. The Central Bank came back to us in November 2017 with a series of questions and clarifications, to which we responded by mid-January. We need to conclude on those and close out any residual customers who may be impacted and who are not included in the 3,500. That is the timeline.
Paddy Burke (Fine Gael)
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So the customer to whom I referred will not get any satisfactory answer until the bank reaches all these stages.
Mr. Paul Stanley:
As I said earlier, we expect that completing that is a number of weeks away. Once we conclude the process with the Central Bank, as I said in response to Senator Horkan, we will communicate with all impacted customers within a month. To be clear, this will involve communicating with them, it will not involve sending out individual cheques for any residual customers. We still have to work through the complications of that process.
Paddy Burke (Fine Gael)
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The bank has two appeals committees, is that correct?
Paddy Burke (Fine Gael)
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Is it correct that the complaints are mainly handled in Belfast? The customer in the case I mentioned said that they have to contact Belfast, and it is not satisfactory. They might ring there and get an answering machine and no reply. There is no unit in Dublin for people who have been impacted in this part of the country. Is that correct?
Paddy Burke (Fine Gael)
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Are they? All of them?
Paddy Burke (Fine Gael)
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But the vast majority of complaints must deal with the bank in Belfast?
Paddy Burke (Fine Gael)
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It is very frustrating for those people to have to go to a help desk in Belfast equipped with answering machines. Can Mr. Stanley bring a message to the bank that if the customers contact it, the bank should contact the customer back in a timely manner.
Paddy Burke (Fine Gael)
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What will happen to the 200 staff in the bank when all this is over? Will they be laid off or redeployed?
Mr. Paul Stanley:
It will be a combination. Some of those staff were already at risk of redundancy but were retained as part of the bank. Some staff were in line for redundancy and, indeed, many wanted to move on and may decide to go. We will look at the numbers and what other issues in the bank require support. Many of these staff have built up a very good skill set, whether they use it in Ulster Bank or elsewhere. We need to decide on this. Put simply, if there was no tracker mortgage examination in a year's time, and nothing else was happening in the bank, many of that 200 would be surplus. That does not refer to the individual staff member but the full-time equivalent numbers in the bank.
Paddy Burke (Fine Gael)
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What will be different in how the bank operates in the future? How can we guarantee that the same thing does not happen again?
Mr. Paul Stanley:
We have learned a lot but I will ask my colleague, Ms Arnett, to join in the response to that question. Many lessons have been learned from this process. For me, one is that we must listen to the customer and put the customer lens across what the bank does rather than viewing it through a purely legal or contractual lens. That is a core lesson not only for Ulster Bank, but also others. That is not what was done. The view was very much a legal one of where the bank stood contractually.
Ms Elizabeth Arnett:
One could divide our response in two broad types of activities. One is based on behaviour and culture and the other is operational changes. On operational changes, first and foremost, we are looking to ensure that our documentation is very clear and there is no ambiguity within it. We have simplified our mortgage products to remove any ambiguity. We have looked at our full mortgage process to see if we can identify any risks within it. One might argue that if that had happened prior to 2000, looking at tracker mortgages and what aspects of risk were there, we might not be here today. Those are the types of steps that we have taken to examine the banks operations and how we can address the issues we have identified.
Importantly, we are examining behaviours and how our values as a bank, and have come a long way in how we expect our staff to behave towards customers.
We have come a long way in that regard in terms of our code, standards and policies and how we work that into the expectations of what staff do and how they behave. We survey every staff member, of whom there are 75,000 as we are part of the RBS group, across the entire bank to identify where, for example, staff members feel it is not acceptable or encouraged to raise issues in their section of the bank. We want to have a challenge culture such that a member of staff can challenge something with which he or she is not comfortable. We have put a big focus on risk management, in particular in Ulster Bank and very much led by the board, and being very proactive in terms of identifying risk to customers. Much has been done but we have a long way to go on those issues. However, we are very committed to achieving our ambition to be number one for customer service trust and advocacy.
Paddy Burke (Fine Gael)
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The level of compensation is between 12% and 20%. Who has final agreement on its make-up? Does the Central Bank, with Ulster Bank, set targets for different clients? How does that operate?
Paddy Burke (Fine Gael)
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What about non-performing loans? Some tracker loans could be non-performing. How are they dealt with if there is no hope for some of them? A vice president of the European Commission, Commissioner Valdis Dombrovskis, gave evidence to the committee this morning that it is advocating write-downs to the banks.
Paddy Burke (Fine Gael)
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There are non-performing tracker loans. The Commissioner advocated write-downs.
Mr. Paul Stanley:
I do not believe the European Commission specifically advocates write-downs but, as the Senator is aware, the European Central Bank, ECB, is looking for a norm across Europe of non-performing loans being 5% of a bank's portfolio. That can be agreed through a number of avenues, such as working things out with customers and getting them off non-performing loans, asset sales or, potentially, write-downs. There is not only one option in that regard.
Paddy Burke (Fine Gael)
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Mr. Stanley is saying it will not come into the equation in regard to trackers. There will be no write-downs in that regard.
Mr. Paul Stanley:
With the exception of loss of ownership customers where, in effect, we facilitate a write-down if there is a residual amount after we do the calculations, the bank does not currently allow write-downs. However, we are readjusting the customer balance back to what it should be. Customers could still be in arrears and difficult circumstances and there is a process through which the bank has to work ------
Paddy Burke (Fine Gael)
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The loans could be still non-performing.
Paddy Burke (Fine Gael)
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But Mr. Stanley is saying that, allowing for what the Commissioner said here this morning, there may be no individual write-down.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I have been listening carefully to the responses of Mr. Stanley and Ms Arnett and reflecting on the lead up to this meeting and the language used in Mr. Stanley's opening statement. At one point prior to the meeting I was willing to accept that Mr. Mallon would not be here. Every business goes through changes and Ulster Bank is no exception to that. I have seen change in businesses. However, having reflected on that and the fact that, according to the witnesses, Mr. Mallon is working out six months' notice, Ulster Bank has a brass neck like no other I have seen because Mr. Stanley and Ms Arnett have put an opening statement before us this morning that would lead members to believe that Ulster Bank is putting the customer first. We have a moral obligation to be fair and to put things right as quickly as possible when we get it wrong. However, Mr. Mallon did not turn up here this morning but has a number of months yet to serve in the bank, which reflects very badly on it. Ulster Bank tried to get a different date for this meeting, in spite of other banks also being in a closed period, which is nothing short of obstruction of the process of the committee and our examination of the affairs of Ulster Bank in the context of tracker mortgages. The scant information that has been put before the committee today is a further example of almost an unwillingness to understand the scale of the difficulties it has created for people.
The witnesses could spend the day dealing with statistics and so on but I am going to look at facts. For seven years, Ulster Bank contested every case with Padraic Kissane and it learned nothing in that time. I will take the witnesses to correspondence from Ulster Bank customers, as referred to by other members. The committee is defending Ulster Bank customers but Mr. Stanley and Ms Arnett should be doing so as that is their job. All they are doing is playing with words and I do not accept half of what they say. We have received correspondence from a lady who was reinstated on her tracker in January 2016 and, to date, has not received a letter about redress. Before Christmas, she telephoned Ulster Bank to find out when she could expect to be repaid the money it wrongfully took from her. She was told it could not give her information and that nobody could tell her when that might happen but that it would be addressed in the second quarter. She had to pay considerable fees for various advice to deal with Ulster Bank in the earlier stages of her efforts to get what was rightfully hers. She will probably have spent between €6,000 and €8,000 on advice by the time the process concludes. Will Ulster Bank refund her that money?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I ask Mr. Stanley to answer that question. Will Ulster Bank refund that €6,000 to €8,000 to that woman?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I have asked a specific question: will Ulster Bank refund to that woman the thousands of euro she had to spend on advice? It is a yes or no answer.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That does not marry with the following section of Mr. Stanley's opening statement which states, "We believe we have a moral obligation to be fair and to put things right as quickly as possible".
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Great.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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As regards giving details to the witnesses, I previously met Ms Arnett and gave her details. If she is the figure for change, she is not making a great job of it because she told me she would contact those customers immediately, but did not do so. As of yesterday, she had not done so. Customers are still waiting to be contacted, as indicated in the first letter I read out, while this letter, written yesterday, indicates that Ms Arnett has not contacted the individuals whom I was told she would contact. She gave that commitment. The person who wrote that letter was written to in November 2017 in regard to his or her tracker loans, one of which has been offloaded to a vulture fund. I asked for immediate intervention in that regard because it was unfair and wrong. The vulture fund has since attempted to enter the building, change locks and cause nothing but distress for the people involved. I do not know how Mr. Stanley and Ms Arnett can sit there, knowing this has happened, and say what they have about their customers.
When Ulster Bank wrote to the customer it disclosed information on at least half a dozen other customers not associated with this. Mr. Stanley was asked about data protection earlier. This is a data protection issue, it is obviously a customer issue and is an issue in which I asked the bank to intervene. It is still ongoing. The bank is still giving no relief whatsoever to the individuals concerned.
Senator Horkan referred to questions to do with switchers. Deputy Jack Chambers and other Deputies have written to the committee because they are also receiving correspondence. They are asking the same questions. Ulster Bank switcher customers have not even received the courtesy of having it confirmed they are impacted and will be dealt with in due course. The witnesses might take note of some of these issues as we go through them because I will ask for an answer on each and every one of them.
In another letter from a customer, the person says the terms and conditions within the contract to the effect that the tracker was for the life of the mortgage have now been changed. This person's money has been returned, which amounted to almost a year's net wages plus a small amount for compensation. The terms of the contract have been changed to favour the bank. Will the witnesses explain this to us? It raises questions about switchers.
These are just a tiny sample from the volume of correspondence we have received. Will customers be refunded for overpayments during the time they were with AIB? This involves another bank and Ulster Bank. Another customer was waiting 17 months for the bank to rectify a situation and, having notified the bank of the person's personal, health and financial situation on 26 November 2017, as well as receiving confirmation from the bank at a further meeting on 7 December 2017 that the customer would be treated as a priority, the customer had to write emails to us on 26 January because the bank did not respond.
None of what the witnesses are saying adds up in the context of a batch of emails I have received about how the bank is treating its customers. I want to ask about First Active tracker customers. Will the witnesses answer these questions?
Ms Elizabeth Arnett:
I will begin. I will make reference to the first comments made by the Chairman on scant disregard for the workings of the House. That certainly is not the position we take in any way, shape or form. With respect to the constraints we feel are on us during a closed period, I raised those matters with the committee before Christmas. Mr. Mallon's resignation came last week and we were unaware it was coming. We were looking for a three-week deferment of our appearance in order that we would be out of the closed period to allow for a discussion on other topics. I note the Chairman questioned our bona fides in this respect and this instructs us that we have a long way to go before we will build trust with the Chairman and the committee. We will certainly work to do this.
On the individual customers to whom the Chairman made reference, I apologise because my understanding was we had resolved those issues. I contacted the Chairman's office this week to make sure I had followed up on everything. That is my fault entirely and I apologise for it. I will look into it. I can only apologise for my own failing in respect of that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am only giving examples out of quite a number of emails.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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While I may be addressing one particular email, I am telling the witnesses there is a significant number of emails that tell the same tale. Otherwise I would not raise it here.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am saying, as an extension of this, Ulster Bank should apologise to the customers who have not been contacted and who, for health and other reasons, contacted the bank and got an assurance they would be given priority but still have not had contact from the bank. What is happening in the bank? What is happening that all of these questions are still being raised legitimately by a considerable number of people, in spite of what the witnesses are saying here this morning?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Has the bank changed the contract?
Mr. Paul Stanley:
Yes, because what has happened is - going back to what I described earlier - customers are being consolidated onto just two mortgage systems. Those mortgage systems have been in existence for more than ten years and there is a standard set of contracts that go with the system, and when people have been migrated across to those systems they have defaulted, in effect, to that contract. I am not sure whether this is the term, but there is a force majeurein there that Deputy Doherty has raised previously with me. I have had a look at it. It is standard to that particular system. It has been in existence for quite a period. I understand we highlighted it to customers when we made the change. I am not sure whether that is the term to which the Chairman is referring but yes, in answer to his question, there was that change.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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This person writes to say, with regard to the fixed rate agreement for the Ulster Bank home loan, that the original mortgage contract referred very plainly in section 2 to the Ulster Bank home loan rate as the ECB rate plus 0.85% for the life of the mortgage. This was also provided for by the bank official at the time. It goes on to talk about-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes, that is a different matter. It goes on to talk about the changes that were made in the contract itself. The offer to return the mortgage to Ulster Bank at the original ECB rate was happily accepted, but the terms and conditions in the contract, for example that the tracker was for the life of the mortgage, have been changed.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We will give this to Mr. Stanley.
Mr. Paul Stanley:
I thank the Chairman. The Chairman asked about the overpayment to AIB. I responded to a previous question from Deputy McGrath. If the question is, with regard to customers who went to AIB but were not on a tracker with AIB and had been on a tracker with us and they were impacted, whether we would refund them the difference between whatever rate they were on in AIB and should have been on from a tracker perspective, the answer is "yes". Was that the question?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes. What about the switchers? Was that the full answer?
Mr. Paul Stanley:
The answer to the switchers is probably what I went through earlier. We have still to contact approximately 500 customers. Some of them are switchers but not all. The intention is to contact them over the coming weeks and there is a residual 100 customers with whom we have a challenge in contacting.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What about First Active?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is there a customer base there?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I ask Mr. Stanley to address the First Active customer base.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Are there trackers there?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Have they been notified?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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A question was raised by Senator Paddy Burke on the earlier meeting with the Vice-President of the European Commission. The note Senator Burke referred to was on encouraging and continuing a more durable reduction in non-performing loans through resolution strategies that involve write-offs for viable businesses and households, with a special emphasis on resolving long-term arrears.
That is what Senator Paddy Burke was referring to. Again, in the context of that meeting, we spoke to the Vice-President about the number of loans that have been sold already to vulture funds, and banks using vulture funds to reduce their non-performing loans. I again express our concerns to the witnesses that these vulture funds, as in the case I mentioned to Ms Arnett, behave in a way that would lead one to believe there was no law and order in this country. It is disgraceful what they have got away with, particularly on our side of it in terms of their transparency and accountability to the Houses of the Oireachtas.
In terms of their business dealings and treatment of customers, the vulture funds have completely ignored the fact that they have an obligation to honour-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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-----the code on the treatment of customers-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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-----as the loans go on.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I want the bank, as it sells the loans, to ensure that does not happen. I have given an example already in terms of the case concerning the individual who wrote to us.
All of this brings me to the global restructuring group, GRG, and I know Mr. Stanley may not wish to comment. Of all of the banks to have come before the committee, Ulster Bank has offered the excuse of the closed period more than any other bank when answering questions. Fair enough, Ulster Bank has adopted that stance. Earlier this week, Mr. Stanley's RBS boss somewhat acknowledged that the global restructuring unit did not treat customers fairly, while being grilled by a committee in the UK. This is an overview of what he said but that seems to have been the case. We have heard from a number of customers who have been involved with the global restructuring group. Arising from Mr. McEwan's comments at the UK committee hearing, is it within the remit of Ulster Bank here in Dublin to state at the very least that something seems to have gone wrong and it will conduct an inquiry into the customer base that may have been affected here in Ireland? Can Ulster Bank here make that decision?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes.
Mr. Paul Stanley:
As the committee will be aware, the level is relatively small in that regard in comparison with RBS in terms of numbers and, indeed, in terms of settlement.
In terms of GRG in Ireland versus the UK, the difficult customer base and the distressed customer base are very different. I am sure the committee is aware, and we have said it before that the vast majority of what GRG then had in Ireland comprised a large property element rather than an ongoing trading cashflow business element. Everybody in the room here is well aware of what happened in the property sector in Ireland and how stressed those loans became. For the most part we put on-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We are also aware of what happened in the banks and how distressed the banks became.
Mr. Paul Stanley:
Yes. Most of the GRG loans were put for a period into forbearance arrangements to see whether there was a potential to work out. We were quite clear at our previous meeting that our success in that regard was limited. In effect, only 100 recovered, which is the number we gave the committee before, in terms of the population that went in there. A large amount of the 2,100 customers who went in initially were sold on as part of the process. To date, our investigation has been on one area, as part of the RBS umbrella, which was around the complex fees element.
In terms of any further investigation, that would be a discussion with the parent bank as to what it is doing and, indeed, what is appropriate.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does Ulster Bank have to go to it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I ask Mr. Stanley to quote part of his statement from this morning to the parent bank.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I refer to when Mr. Stanley said: "We believe we have a moral obligation to be fair and to put things right as quickly as possible when it goes wrong."
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In the light of all of this new information that has come out-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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-----from different banks and the Ulster Bank-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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-----with regard to customers, Mr. Stanley might very well go back and say Ulster Bank should reopen and take a fresh look at this matter because it is now customer-friendly, its staff are cuddly people and would like to make sure everybody is okay. That stance also might be a start in rebuilding trust with the SME sector. I ask Mr. Stanley to come back to us on that matter.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Mallon was mentioned this morning for his non-attendance. We are quite happy to accommodate him if he wants the right to reply and to come before the committee. I ask Mr. Stanley to pass on our invitation.
Pearse Doherty (Donegal, Sinn Fein)
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I want to pick up on the point the Chair raised about GRG. It is quite a while since I wrote to the Central Bank asking it to initiative an investigation into Ulster Bank on its handling of GRG, West Register and all the other issues we have raised. The momentum has increased as a result of what has been uncovered through a lot of campaigning in Britain. I have followed the matter quite closely. Some of the internal documentation that the Ulster Bank's parent group had is absolutely disgusting-----
Pearse Doherty (Donegal, Sinn Fein)
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To think that this is the way that bankers behaved----
Pearse Doherty (Donegal, Sinn Fein)
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-----it is appalling. A long time ago this committee tried to ascertain the accurate number of businesses affected. Many of the business owners have told me that they felt like they were on death row. As many as 2,141-----
Pearse Doherty (Donegal, Sinn Fein)
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-----Irish SMEs went onto death row or into GRG. We still have not got accurate information as to how many companies survived. Some claim that the number of companies is as low as six and Ulster Bank has said that it is no more than 100.
Pearse Doherty (Donegal, Sinn Fein)
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Is there information or must we still deal with vagueness? I understand that the Central Bank has engaged with the Ulster Bank. Has the Central Bank engaged with the Ulster Bank on its GRG activities in this State?
Pearse Doherty (Donegal, Sinn Fein)
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How many businesses survived?
Pearse Doherty (Donegal, Sinn Fein)
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Of the customers Mr. Stanley knows about, 100 survived.
Mr. Paul Stanley:
Yes, and we have shared that figure of 100 with the committee before.
The Deputy asked about the Central Bank. We have received correspondence. I do not believe that it is just Ulster Bank, particularly in terms of SME pricing, and we are following up on that. That is the latest from the Central Bank.
Pearse Doherty (Donegal, Sinn Fein)
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In terms of the internal documentation that has come into the public domain, Mr. Stanley may want to take this opportunity to recant and apologise for the approach taken by the Ulster Bank and its parent company. How could bankers talk about businesses and customers in that way?
Pearse Doherty (Donegal, Sinn Fein)
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Some of this documentation was not correspondence but was an operational manual.
Pearse Doherty (Donegal, Sinn Fein)
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The model used here in Ireland was a mirror image of what was used by GRG in the UK, including the companies that were set up.
Pearse Doherty (Donegal, Sinn Fein)
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What was the difference in approach here outside of the Central Bank? The committee has raised this issue and will continue to do so. Last year, I raised it with the Taoiseach and called on everyone to get to grips with this matter because it is the new tracker mortgage scandal.
These businesses had numerous employees and the potential to deliver for the economy. Some may have gone out of business but not at the scale at which they went. There was obviously an orchestrated default. A company was set up that benefited from this. We talk about vulture funds. The bank was the vulture to its own customers. It orchestrated defaults and picked from the carcases of those who lost.
Mr. Paul Stanley:
I would not accept that point. I think the Deputy is going back to the West Register point that he raised before. Some 15 properties went into that. The Deputy might look into the accounts of that company. They show that the business made a profit. If the Deputy looks at what those properties were valued at when they were taken by the bank, they went at written-down value when they went to West Register. The bank had already taken a loss on those. I do not accept that the bank made wholesale profits on those activities.
Pearse Doherty (Donegal, Sinn Fein)
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There was not just the issue with West Register. The bank orchestrated defaults in companies and then recovered their assets.
Pearse Doherty (Donegal, Sinn Fein)
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Will Ulster Bank take a proactive approach or will we have to do what we did with the tracker mortgage scandal again? Will the committee, the Government and the Central Bank have to do a pincer movement on Ulster Bank or will Ulster Bank learn the lesson and carry out its own investigation? The Financial Conduct Authority, FCA, will publish its report. The pressure is coming on. I would argue that the game is up. If Mr. Stanley genuinely wants to restore confidence in Ulster Bank, having been tipped as being the CEO in-waiting last time and missing out, this could be his turn. I am sure Mr. Stanley does not want this hanging over him if he is in the top job.
Mr. Paul Stanley:
With regard to small and medium enterprises, SMEs, we will gauge what is coming from the Central Bank at the moment. Part of the challenge of coming in here on this date before year end is that we could have talked about that a little more fully later. Maybe we can pick up again after year end results. I am a little conflicted about having the detail of the discussion today. Based on what has happened with the parent and the focus, both internally and from the Central Bank, it is a sector which we are looking at with regard to what has happened in our book.
Pearse Doherty (Donegal, Sinn Fein)
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Going back to the tracker mortgage issue, we unfortunately cannot raise all of the individual concerns raised with us. I apologise to everybody who has contacted us with regard to this but we would be here for the next week if we did that. I will ask Mr. Stanley about a case where an individual took out a tracker mortgage and, when the European Central Bank, ECB, interest rate increased, that person's rate increased. However, when the ECB reduced its rates, Ulster Bank wrote to the customer to say that the new minimum monthly payment was a certain amount but as the customer was already due to pay more than that, the bank had not made any changes to the amount it collected from the person's bank account. That effectively meant that the bank held the interest rate at a higher level which obviously shortened the term of the mortgage but did not reduce in line with the ECB's reduction. This customer wrote to the bank to instruct it that only the minimum amount should be deducted but the letter was ignored. Was this common practice within the bank, that when the ECB's rate reduced, it did not automatically involve a reduction in the tracker mortgage customer's account? This individual was aware of his rights even though the bank did not afford him his rights when he asked for the rate to be reduced because the payment would still be above the minimum. Was this policy within the bank? Has Mr. Stanley come across this?
Mr. Paul Stanley:
If the Deputy wants to send me the details of that, I am happy to follow it up. The norm in the bank is that the payment should reduce in line with the change of interest rates. The Deputy probably does not know the circumstances of the customer. Was that customer in arrears or otherwise? That could be a possible reason but I do not know without looking at the detail. The norm should be that as interest rates go up or down, the payment levels should change accordingly. It may be a case that communications come from the bank to offer the customer the option to keep repayment levels at a higher level to pay down earlier but that should be the customer's option, not the bank's.
Pearse Doherty (Donegal, Sinn Fein)
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I had a direct quote here. I will ask the customer about the matter. He has already written to the bank.
Pearse Doherty (Donegal, Sinn Fein)
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I ask Mr. Stanley to inquire about this, even outside the matter of the individual customer. We go back to individual customers who have raised this matter. They also believe that the bank will come down hard on them in the future.
Pearse Doherty (Donegal, Sinn Fein)
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Will Mr. Stanley come back to the committee and indicate whether this has happened and has been an issue with more than one person?
Pearse Doherty (Donegal, Sinn Fein)
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I will go back to what Senator Conway-Walsh raised with regard to the subject access request, SAR. I have had much correspondence about this. It relates to customers' own documentation. The bank has a 40 day SAR deadline for customers. I will give a snippet of one email, which states that the customer requested details through a SAR on a certain date and was told 40 days later, after chasing it, that the bank could not fulfil the request as the customer was on a tracker mortgage and had to call the tracker team in Dublin. The customer sent back the €6.35 with a letter called a tracker closure letter and a number to ring that did not work. The tracker team in Dublin said the customer's account was included in the Central Bank review but advised that it was the SAR team's responsibility to get the data to the customer. The customer made numerous calls, week after week, to the UK SAR team, the tracker mortgage examination, TME, team, the complaints team and the mortgage operations team. They all promised to help the customer but no one has. The customer received a letter offering a small sum of money but does not want this, rather when his or her data will be received.
Pearse Doherty (Donegal, Sinn Fein)
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That is not a unique occurrence.
Pearse Doherty (Donegal, Sinn Fein)
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It is. The bank has a legal responsibility to provide the data. Going back to my earlier point, I believe the bank is in breach of the law, not just on issues with data but probably on more serious issues. There are other emails but the language is quite unparliamentary so I may refrain from reading some of those out. It comes out from that frustration which that individual has talked about, being sent from pillar to post and so on. One of the customers who came before the committee was an Ulster Bank customer. Did the bank ever meet with that customer?
Pearse Doherty (Donegal, Sinn Fein)
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Has the bank sat down and had meetings with some of the customers?
Rose Conway Walsh (Sinn Fein)
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Before we leave, I want to get clear in my mind the exact timeline for the bank concluding all of this and a reassurance about the bank's ability to complete this on time. There are 3,500 affected customers, some 2,500 of whom have been returned to the correct tracker rate. When will the others be returned?
Rose Conway Walsh (Sinn Fein)
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So every-----
Rose Conway Walsh (Sinn Fein)
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When will the other timeline, to the end of March, be completed?
Rose Conway Walsh (Sinn Fein)
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Some 2,500 by the end of March and 3,500 by the end of June. By then, everybody will have received a level of compensation and redress.
Mr. Paul Stanley:
They will have received compensation or remediation in accordance with what we set out for it. The one caveat, as I have said, is that as we conclude the phase 2 negotiations with the Central Bank, we need to plan out when our compensation and remediation of whatever incremental numbers come on will take place.
Rose Conway Walsh (Sinn Fein)
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Will those be concluded by the end of-----
Rose Conway Walsh (Sinn Fein)
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People still getting the repeated letters really do not know at this stage.
Mr. Paul Stanley:
We should within the next number of weeks conclude with the Central Bank. Then we will know who was impacted or not impacted. We should be able to be in a position to confirm to customers whether they are impacted. The repeated letters are being driven by us not having concluded phase two with the Central Bank.
Rose Conway Walsh (Sinn Fein)
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That is the exact same answer the witness gave me the last time here, a year ago. I went back to the customers and said they would be contacted and know where they stood, at the very latest, within six weeks. That did not happen.
The witness indicates that if a customer requests a meeting, the bank will engage with the person and make the necessary arrangements to suit the customer. Is he giving that commitment today? Will he reiterate it? If somebody asks for a meeting with the bank, it will engage with the customer.
Rose Conway Walsh (Sinn Fein)
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Is there a timeline for that meeting?
Ms Elizabeth Arnett:
It would be as soon as the customer wants it. That is the standard we endeavour to meet, especially for customers particularly impacted by the tracker mortgage examination. As we said, for customers who have lost their homes we would assign an individual who would work with them through the entire process. They would have an individual case handler whom they could meet whenever they need to. We get requests from customers all the time for meetings and we endeavour to meet those requests as soon as possible.
Rose Conway Walsh (Sinn Fein)
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If the people who do not know if they are in or out and who keep getting repeated letters request a meeting, the bank's representatives will meet them.
Ms Elizabeth Arnett:
Yes. It is important to emphasise the point. We look at customer communication and listen to calls and much frustration comes from a lack of certainty. We have exacerbated that position by not being able to give customers certainty in terms of when they will know and get paid. As soon as we are through the phase two process, we will be able to very clearly say to customers whether they are impacted or not. We can only confirm the 3,500 impacted and we cannot confirm the non-impacted until we are through the phase two process. As soon as we are, will be in a position to confirm that.
Rose Conway Walsh (Sinn Fein)
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Is the witness saying the bank's representatives will not meet those customers yet? These are the people who absolutely know they are to be included and charged the wrong rates.
Rose Conway Walsh (Sinn Fein)
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No, they know they are affected and have sought confirmation from the bank but two years later they are getting repeated letters. Will the bank's representatives meet those customers?
Rose Conway Walsh (Sinn Fein)
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I thank the witness. I am really concerned about the levels of compensation relative to the other banks. Bank of Ireland has told us the average rate for those denied a tracker is 20% and AIB gave us figures as well around 20% for those with a private dwelling home mortgage no longer on a tracker, or 23% for those on the higher margin. The witnesses have said the compensation will be a maximum of 20%.
Mr. Paul Stanley:
On private dwelling homes, the rate runs from 12% if the customer has never been in arrears or financial difficulty. If impacted customers were previously in arrears, it is 13.5%. Likewise, with customers in financial difficulty and entering the process of restructuring arrangements, it is 13.5%. If the impacted customers have previously engaged with us in legal proceedings, it goes to 15.5% and for impacted customers who have lost ownership of their property, it is bespoke and it is €50,000.
Rose Conway Walsh (Sinn Fein)
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Is the maximum 20%?
Rose Conway Walsh (Sinn Fein)
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So 20% is the maximum as it stands.
Rose Conway Walsh (Sinn Fein)
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The bank can expect very many appeals. When is it expected that the two legal cases will be concluded?
Rose Conway Walsh (Sinn Fein)
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It is unacceptable that the bank's level is a maximum of 20% while the rates of compensation from other banks are more than that. It is something I am sure the Central Bank will look at that.
Rose Conway Walsh (Sinn Fein)
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Is it satisfied with those levels?
Rose Conway Walsh (Sinn Fein)
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Did it indicate it was satisfied with it?
Gerry Horkan (Fianna Fail)
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Will the witnesses confirm that when the figure is agreed with the Central Bank on the second batch, whether it is 3,500 or 50, it will be supplied to us on that day? We will then know how many more impacted customers there are. It would be good if Ulster Bank representatives were back sooner rather than later to discuss all the matters we could not raise today. Perhaps that could happen after the first quarter, when many more payments are made.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I find it strange that the engagement with Mr. Kissane went on for so many years but alarm bells did not go off in the bank.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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When a customer has been put on a lower rate than what he or she should have due to error, is there a discussion with the customer before the rate is increased to what it should be?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I know the bank advises before a change is made. If the bank made the error in the first place and is putting a customer on an increased rate, it should ensure it talks to such customers to ensure the extra payment will not cause any hardship.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank the witnesses for attending.