David Stanton (Cork East, Fine Gael) | Oireachtas source

I apologise if I misheard the Deputy. However, it is important we refer to the constitutionality of legislation and the risks associated.

Once we contemplate reforms that relate to the administration of justice within the courts system, we have to be extra vigilant. It may well be that the Law Reform Commission's vision of a rules of court approach to the reform of the multi-party action area will continue to be the best one to take. There is no instant solution for the introduction of multi-party actions, despite how pressing the case for them may be at this time.

We now have a process available to us which can inform us on the best way in which we can progress the multi-party action issue. This also involves the Law Reform Commission intention on the existing group action approaches taken before the courts. As the Law Reform Commission recommended, any reform in this area should be based on principles of procedural fairness, efficiency and access to justice. In particular, there should be active case management of such cases by the courts in keeping with the general trend in the reform of civil procedure. The multi-party action conceived by the commission was intended to operate as a flexible tool to deal collectively with cases which are sufficiently similar.

The Law Reform Commission also recommended that a new multi-party action procedure should operate on the basis of an opt-in system whereby individual litigants would be included in the group only if they decided to join the group action. That is very different from the US class action procedure in which individuals are deemed to be part of the class action unless they opt out of it. There is much to consider in that regard.

The Law Reform Commission report of 2005 was not carried forward by the Government at the time nor by its successors. In hindsight, that was, perhaps, a missed opportunity. The hesitancy was largely driven by an underlying concern about the potential cost burden on the Exchequer given that, as the then Minister surmised, the State would be the main object of claims. However, as has been acknowledged, the relevant policy considerations have changed in the period since the publication of the Law Reform Commission report in 2005. Multi-party actions have been road-tested in several common law jurisdictions, as Members have said, including England and Wales. The referral of the question of the introduction of a multi-party action procedure in the Irish legal system for consideration by the Honourable Mr. Justice Peter Kelly as part of the review of a civil justice administration is, therefore, a timely opportunity for us to deal with the matter in its broader civil justice setting. The initiative of the Minister, Deputy Flanagan, in that regard, as agreed by Government today, meets other parties to the debate halfway. It will provide a platform to identify the various issues that need to be tackled in opening up the possibility of the introduction of a scheme for multi-party actions in this jurisdiction.

Mention has been made of tracker mortgages and I wish to respond to some points made in this regard. The fair treatment of consumer borrowers is a key requirement of the financial services regulatory framework and the Central Bank consumer protection code. That requires all residential mortgage lenders to act honestly and fairly in the best interests of their customers and not to mislead customers about the products they provide. It also requires lenders to make a full disclosure of all relevant information to a consumer in a way that seeks to inform him or her and enable him or her to make an informed decision before entering into or changing a loan or other financial services agreement.

Since 2008, the Central Bank has warned lenders of their duty to act in the best interests of their customers when recommending that a borrower switch from a tracker mortgage to another mortgage product. It announced in October 2015 that it had commenced a broader industry-wide examination of tracker mortgage related issues that covered, among other things, transparency in communication and the contractual rights of tracker mortgage borrowers. The examination is the largest review ever carried out by the consumer protection side of the Central Bank. It covered 15 mortgage lenders who may have sold a tracker mortgage product to a consumer borrower from the time the lender commenced selling tracker mortgages until December 2015. The Central Bank subsequently confirmed that tracker issues have arisen in respect of 11 of those lenders.

The second phase of the examination involved an extensive internal review of mortgage books to identify mortgage borrowers who were impacted by banks' failings. It was due to be finalised by the end of last September. However, in its latest update, published last month, on the progress of the tracker mortgage examination, the Central Bank indicated that 13,000 impacted mortgage borrowers had been identified up to that point, although it was noted that number was expected to increase, which it did, as Members know. The other two phases of the Central Bank examination cover the calculation and payment of redress and compensation for impacted customers. The Central Bank has always made clear that those phases can run concurrently with phase two, but as yet redress and compensation have only been paid to a minority of impacted tracker borrowers.

The Minister for Finance, Deputy Donohoe, met the chief executives of the five main banks at the end of October and made it clear to them that all affected customers are to be identified and the wrongs are to be put right by means of payment of appropriate redress and compensation without any further undue delay. The Government is also determined that a range of follow-up actions will be pursued to ensure banks stand by those commitments. Banks must now actively and constructively engage with the Central Bank and provide all information required within the timeline set by the regulator.

The existing supervision and enforcement powers of the Central Bank are strong and should be used to punish wrongdoing where supported by evidence. Thus far, the Central Bank has imposed a monetary penalty of €4.5 million on Springboard Mortgage Limited for serious failings in its obligations to its tracker mortgage customers. It is also pursuing enforcement investigations in respect of PTSB, Ulster Bank and others. It is also liaising with and has statutory reporting obligations to the Garda Síochána and other relevant statutory bodies in the case that information obtained by it at any stage prior to, during or after investigation gives rise to a suspicion that a criminal act may have been committed.

The Government will be monitoring the progress and outcome of that important Central Bank examination very carefully and will consider further policy actions if necessary. Some tracker mortgage customers have been disgracefully treated by mortgage lenders and many borrowers have incurred considerable loss, in particular those who have lost their homes directly or indirectly as a result of the harmful action of lenders. I assure the House that the Government is fully aware of the seriousness of the matter and wishes to have adequate redress and compensation provided to impacted consumers as quickly as possible. The Government supports and encourages the Central Bank to complete its tracker mortgage investigation as quickly as possible.

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