Catherine Martin (Dublin Rathdown, Green Party) | Oireachtas source

The banks are deliberately overcharging homeowners unlucky enough to be stuck with variable rate mortgages. The banks do this because they can. A family with an average mortgage in the State can now lose up to €400 per month or up to €100,000 over the lifetime of a mortgage. This is money unjustifiably taken from ordinary families and stolen from the real economy. The irony is that the real economy and its health are where our economic salvation lies. Those who rob from the real economy rob us all of our futures. This is not backing brave, it is attacking brave. It is hard to credit that the banks which were saved by the taxpayer can now, in the teeth of that rescue, gouge homeowners in such a shocking way. It is shocking and it is immoral but, perhaps most awfully, it is treacherous. How can we explain this to those hundreds of thousands of families who daily strive to pay their home loans in the face of financial challenges? How can we explain to them tonight? They have suffered the extra taxes, reduced incomes and all the hardship required to bail out the banks and now those same banks steal from them. Something must be done and it is our duty in the House to act.

I commend the efforts of Deputy Michael McGrath who has been a constant voice in this area and I agree with him that banks will not act voluntarily and must be forced. Where I take issue, however, is with the Bill before the House. It is drafted with such infirmities that it could never in its current form hope to see the light of day. It would not pass the test of constitutionality and would inevitably be struck down. The banks know this, the civil servants know this and the Government knows this. Let us not give them all a told-you-so moment in the sun. While there is a process on Committee Stage whereby Bills can be amended, this Bill cannot be amended as it is inherently and fundamentally flawed. It would be much better and safer from the perspective of hard-pressed borrowers to start again. What is required is thorough consultation and endeavours to bring the Members of the Thirty-second Dáil together in an unprecedented collaborative approach, coming together as legislators from the get-go. This approach would safeguard against losing valuable time and avoid an imminent and most serious setback when this flawed legislation is inevitably deemed unconstitutional.

In fairness, it is not hard to get a sense of what the Bill seeks to achieve. It seeks to create some objective standard by which a regulator can measure whether banks are overcharging. This is a difficult process when private parties have signed up to private contracts allowing one party later to retrospectively change the rate charged. The genuine effort and the laudable purpose is not achieved by the Bill in the form presented. The Bill as drafted requires the Central Bank to form a conclusion on an assessment which is so broad and vague in its terms on the state of competition in the market that in its current form it makes very little sense. The conclusion the Central Bank must reach is whether a market failure exists. Market failure is defined as a situation in which a lender is charging a variable interest rate which is higher than the Central Bank considers to be reasonably justified. Where the Central Bank came to such a conclusion, it could direct a lender not to charge a variable rate exceeding a rate specified by the Central Bank. The direction could be in regard to loans generally or to categories of loans or even to a particular loan. For example, theoretically the regulator who made the direction could himself direct that his own lender reduce his own personal mortgage rate and the bank would be powerless to challenge such biased direction. He could direct that those who took out loans after 2005 be given a massive reduction while others could be forgotten. In short, he could do whatever he wanted unchecked by any supervisory or other power.

A direction under the Bill could be for an indefinite duration of time and could not be appealed by the lender to the High Court or to any other tribunal. As such, the Bill at its core gives the Central Bank the power to set variable interest rates for the banks. This is a huge power to vest in an organ of the State and would render the banks entirely dependent on the whim of the regulator. It would be unprecedented internationally as it could apply to a single loan and, therefore, to a single borrower just as much as to every loan. It is whatever the Central Bank wants. There is no appeal to the courts. The role of the courts is usurped or ousted and there is no chance to challenge a decision which might be crucial to the survival of an institution. I have further concerns that no mechanism is envisaged by which either side could be heard during an assessment. There is no right to be heard which appears to breach a fundamental principle of natural justice, especially when there is no right of appeal from a decision taken against one. This decision may be one that is crucial to a party.

As much as anyone, I am appalled at what the banks have done to this country and what they continue to do. However, this Bill will not help our cause. There is a duty on all of us in opposition and in government, especially in this era of new politics, to bring forward Bills in a manner which is not populist, rushed or sensationalist. This is particularly the case when considering the precarious voting arithmetic of the new Dáil and, especially, when dealing with emotive and hugely important issues. We have a duty to consider carefully the legislation so that if it were enacted it would not create more delay and mischief than it seeks to redress. The Bill for all its good intentions would if enacted set aside decades of carefully established rights to fair procedures.

To the crowd and those suffering under the burden of excess rates, this may be an immediate issue, but as legislators, we must look further down the road and be cognisant of the unseen consequences.

See this speech in context