Michael McGrath (Cork South Central, Fianna Fail)
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126. To ask the Minister for Finance the action he is taking to deal with overcharging of tracker mortgage customers; his views that it is a widespread problem in the banking industry; and if he will make a statement on the matter. [32864/15]

Michael McGrath (Cork South Central, Fianna Fail)
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I raised the issue last week about the overcharging of certain tracker mortgage customers by way of a Topical Issue debate with the Minister’s colleague, the Minister of State, Deputy Deenihan. As the Minister knows, a scandal has emerged with Permanent TSB and 1,400 of its customers wrongly denied a tracker rate, having come off a fixed-rate mortgage, for example, or not properly informed of their right to a tracker rate. Of course, a tracker mortgage rate in the current interest rate environment is very lucrative and essential to the customer who is entitled to it.

I believe, however, a much wider review across the banking system is needed because evidence is emerging that other banks have employed similar tactics against customers. I am not satisfied with the Central Bank’s response to date. The Minister should intervene and make his views known that there needs to be a system-wide review of how customers entitled to tracker mortgages were denied them and how other customers were coaxed from their tracker products by certain methods used by the banks.

Michael Noonan (Limerick City, Fine Gael)
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This topic was considered in a Topical Issue debate last Wednesday, taken by my colleague, the Minister of State, Deputy Deenihan. The Central Bank has taken direct and very public action on the failures by Permanent TSB and Springboard Mortgages 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. 

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

I also understand the Central Bank is examining several 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. If the Deputy is aware of other banks that have behaved in similar ways, leading to failures similar to that of Permanent TSB, he should bring them to the attention of the Central Bank. Although it does not investigate individual consumer complaints, it does welcome information from consumers of financial products. Individual customers can complain to the Financial Services Ombudsman if they are unable to resolve a complaint satisfactorily with their financial services provider.

The Central Bank is an independent institution and I do not have a role in directing its enforcement or investigative activities, nor does it report to me on specific investigations it undertakes. That said, the Government expects the Central Bank to use the powers available to it and to take whatever steps are necessary to ensure all customers are protected, whether this involves formal investigations or other means.

Michael McGrath (Cork South Central, Fianna Fail)
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As the Minister knows in the case of Permanent TSB, it lost a High Court case on this matter and had findings made against it by the Financial Services Ombudsman. However, it still took it to the steps of the Supreme Court before, under duress from the Central Bank because of an enforcement investigation, it bowed to the inevitable, put its hands up and acknowledged up to 1,400 customers had been mistreated, denied a tracker mortgage rate after coming off a fixed-rate or given the wrong information about their entitlement to a tracker rate. That is a serious matter. At least 22 families lost their homes directly because of the overcharging by the bank. They are now in the process of going through a compensation scheme.

I do not believe the matter ends there, however. It was reported in the Sunday newspapers that AIB has reinstated tracker mortgage rates to certain customers who were wrongly denied the rate after coming off a fixed-rate mortgage for some time and that some customers have had a write-down of their mortgages because of this issue. Action needs to be taken on this. There must be a system-wide review by the Central Bank across the banking system as to how customers, entitled to return to a tracker rate having come off a fixed rate, were treated. The six-year limitations rule for complaints to the Financial Services Ombudsman means many customers who should have been entitled to go back on a tracker rate in 2009 and 2010 will have the window for recourse to the Ombudsman shut in their faces shortly. This issue needs to be dealt with.

Michael Noonan (Limerick City, Fine Gael)
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The bulk of the decisions taken by Permanent TSB were taken between 2004 and 2008, which was before my watch. Practices were not corrected then. Subsequently, it went to a Supreme Court case and on into 2013.

The Central Bank is independent but is responsible under law to investigate matters such as this and to rule out malpractice in financial institutions. I will bring the Deputy’s concerns to the attention of the Central Bank because he has indicated he firmly believes the practice also prevailed in other institutions. If that is so, it should be fully investigated.

Michael McGrath (Cork South Central, Fianna Fail)
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Before the end of this Dáil, will the Minister address the issue of the six-year limitation rule for access to the Financial Service Ombudsman, not just for customers denied a tracker rate but those affected by the mis-selling of payment protection policies, for example? They are being denied justice and recourse in respect of financial products which were defective or unsuitable for them from the very beginning. While the issue seems to be tied up with a wider statute of limitations review, will the Minister deal with this? The Central Bank investigation into payment protection insurance policies only dealt with cases from 2007, meaning tens of thousands of other customers have been denied justice in respect of these financial service products. If the Minister could amend that six-year rule, it would open the door for those customers to be properly and fairly treated.

Michael Noonan (Limerick City, Fine Gael)
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If the Deputy frames a suitable parliamentary written question, which covers the ground he has indicated now, I will ensure he gets a full and detailed considered reply.