Dáil debates

Wednesday, 23 September 2015

Topical Issue Debate

Mortgage Lending

1:15 pm

Photo of Jimmy DeenihanJimmy Deenihan (Kerry North-West Limerick, Fine Gael) | Oireachtas source

I thank the Deputy for bringing this matter to the attention of the House again. I trust he is referring to the recent investigation undertaken by the Central Bank into Permanent TSB and its subsidiary company Springboard Mortgages limited. The role of the Minister for Finance is to provide the right framework to protect consumers of financial services. The Financial Services Ombudsman can provide information to the Central Bank if it becomes aware of a possible systemic issue on foot of individual complaints to it about the behaviour of a particular institution. Under section 57CQ of the Central Bank Act 1942, as amended, the ombudsman may make recommendations to the Central Bank with respect to measures that it may take to effectively deal with persistent patterns of complaints.

In this case, as the Deputy will be aware, as a result of an enforcement investigation by the Central Bank of Ireland, significant failures were identified in Permanent TSB and Springboard associated with tracker mortgage options and rates. Arising from the Central Bank’s enforcement investigation, Permanent TSB has agreed to implement a redress and compensation programme to address the detriment suffered by 1,372 customer accounts. The consequences of these failures are serious and include mortgage overpayments, mortgage arrears, legal proceedings, and, in certain cases, loss of ownership of properties, including some homes, as the Deputy mentioned.

The chairman and chief executive of Permanent TSB Group Holdings plc have fully acknowledged that this is a matter of the utmost seriousness. The mortgage redress programme has a number of objectives: to restore the affected mortgage accounts to the position they would now be in had the failure not occurred; to make a compensation payment to affected account holders; to make a payment to affected account holders for use, if required, in securing independent advice on this matter; and to provide a comprehensive appeals system for affected account holders.

I understand from the Central Bank that enforcement investigations into these issues at Permanent TSB and Springboard are currently ongoing. For that reason, it is not in a position to provide any additional information in respect of these enforcement investigations at this time.

As the Deputy will be aware, the Financial Services Ombudsman dealt with complaints from Permanent TSB customers on this issue. I understand it was in dialogue with the Central Bank on the topic. A number of cases were put on hold when findings in other cases were appealed to the High and Supreme Courts. I understand that the Financial Services Ombudsman’s bureau kept in constant communication with these complainants while the cases were stayed pending the outcome of the Supreme Court challenge. These cases will now be processed through the PTSB redress scheme, but the complaint cases remains open with the Ombudsman. I understand that Ombudsman continues to actively engage with the Central Bank of Ireland on this subject.

I also understand that, as part of the Central Bank’s ongoing supervisory work over the past few years, it has identified and pursued a number of lender-specific issues in regard to transparency for consumers moving off tracker rates or who are not moved to a tracker rate at the end of a fixed-rate period. The Central Bank has made appropriate use of its supervisory and regulatory powers, including the administrative sanctions procedure, in order to ensure that the interests of those consumers affected are protected in each of those cases. The Central Bank is also currently examining a number of lender-specific practices, particularly with regard to transparency of disclosure for borrowers. The determination of the most effective and appropriate further supervisory engagement will be informed by the outcome of this current supervisory work, as well as any other market intelligence, including its engagement with the Financial Services Ombudsman.

The Central Bank is an independent institution and the Minister for Finance does not have a role in directing its enforcement or investigative activities. That said, the Government expects the Central Bank to use the powers available to it and to take whatever steps are necessary to ensure that all customers are protected, whether this involves formal investigations or other means.

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