Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

In April the Central Bank provided me with a comprehensive update on the tracker mortgage examination. It subsequently published the update on its website. The report indicated that an additional 3,400 impacted on accounts had been identified since the previous December progress report, bringing the total number of impacted on accounts to 37,100. Progress has been made in the payment of redress and compensation. A total of €412 million has now been paid in respect of 88% of accounts so far identified as impacted on and verified pursuant to the examination. This is additional to the €47 million paid in redress and compensation to impacted on customers identified outside the scope of the industry-wide examination.  

In line with its engagement with lenders via the examination the Central Bank, as independent regulator, has intervened on prevailing rate issues. This intervention is aligned with the Central Bank’s functions as part of the examination to rigorously test and challenge, from a systemic perspective at the macro level, the position adopted by lenders in order to try to achieve the best result for all customers within a group.  

One of the lenders which indicated that there was an issue with the prevailing rate was AIB.  The matter was pursued by the Central Bank and directly as a result of its intervention, AIB prevailing rate customers were admitted to the examination and will receive a compensation payment, as well as an offer of the current prevailing rate, as opposed to the prevailing rate at the time their fixed rate expired.  By securing their admission to the examination, the Central Bank has also ensured those customers will have the opportunity to utilise the examination’s appeals processes should they be dissatisfied with any aspect of their redress and compensation offer and can pursue their case, based on their own unique circumstances, with the Financial Services and Pensions Ombudsman. In the particular case the Central Bank examined AIB’s model to determine the then prevailing rate and concluded that it was reasonable in relation to the contractual interpretation of the term "prevailing rate”. The bank also advised me that it had formed the view that, at a macro level, it could not mount a legal challenge on behalf of all customers in the relevant group on this issue.  Nevertheless, more generally it advises that it continues to engage with and challenge lenders on a number of tracker mortgage issues which include the prevailing rate.

See this speech in context