Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The Central Bank (Supervision and Enforcement) Act 2013 has given powers to the Central Bank to direct the payment of redress to customers, where appropriate. However, this provision does not have a retrospective effect and the Central Bank does not have the statutory power to compel lenders to implement redress and compensation programmes in respect of failures that occurred prior to the introduction of the 2013 Act. However, where customer detriment is identified in the tracker examination, the Central Bank has clearly articulated its expectations of lenders to provide appropriate redress and compensation to impacted customers in line with its prescribed principles for redress, as set out in its report dated 23 March 2017.

The principles for redress are designed to ensure that harm is stopped as soon as possible and that impacted customers receive appropriate redress and compensation in a timely manner. In addition, they provide for an independent appeals process to ensure customers have an option to challenge any aspect of the redress and compensation package, including the tracker rate margin they receive from their lender. While the Central Bank expects lenders' reviews to deliver fair outcomes for customers, the bank believes the appeals process is a very important part of the overall framework to ensure there is an independent and transparent process in place for impacted customers. The appeals process, however, is additional and without prejudice to the options available to the borrower to bring a complaint to the Financial Services Ombudsman or initiate court proceedings.

In all, arising from the examination, approximately 9,900 impacted customer accounts have been identified as at the end of February 2017. Lenders have commenced contacting impacted customers and rectified the interest rates applied to such impacted customers' accounts, thus stopping further detriment. The Central Bank has also indicated that, as at the date of its most recent report, interest rates have been rectified on more than 90% of the accounts which require rectification.

I understand this issue was the subject of questions to the Governor of the Central Bank at a committee meeting this morning, at which he provided the most up-to-date information available to the bank.

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