Michael McGrath (Cork South Central, Fianna Fail)
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29. To ask the Minister for Finance if he will provide an estimate of the number of mortgages identified as part of the Central Bank investigation into tracker mortgages whereby the customer was wrongly denied his or her right to a tracker rate or the incorrect tracker rate was applied; his views on the widespread nature of this practice; and if he will make a statement on the matter. [1892/17]

Pearse Doherty (Donegal, Sinn Fein)
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30. To ask the Minister for Finance the way in which he will ensure that those responsible are held accountable for the financial and social distress caused by their removal of the right to a tracker mortgage to thousands of families; and if he will make a statement on the matter. [1986/17]

Michael McGrath (Cork South Central, Fianna Fail)
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My question relates to the Central Bank probe into the fact that thousands of customers were denied the right to return to a tracker interest rate and many others were denied the right to be on the correct tracker rate. The Governor of the Central Bank, when he came before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and the Taoiseach, acknowledged that the figure could be as high as 15,000 customers. I ask the Minister to provide an update to the House on that matter and to outline his views on the systemic and widespread nature of this enormous problem which affects thousands of customers in Ireland.

Pearse Doherty (Donegal, Sinn Fein)
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My question focuses on accountability. How will we hold individuals, rather that those at an institutional level, who were involved in a major and widescale theft of people's money to account? Up to 15,000 individuals over a number of years were affected. The amount of money that would have been at risk is close to, if not in excess of €500 million, if customers had not identified the issue and proceeded with cases to the Financial Services Ombudsman and others. What steps will the Oireachtas take to ensure that there is individual accountability for those involved in this practice in financial institutions?

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 29 and 30 together.

As Deputies are aware, the Central Bank has commenced an industry-wide examination of tracker mortgage related issues covering, among other things, transparency of communications with and contractual rights of tracker mortgage customers. The examination is ongoing, and while all lenders are currently in the process of carrying out their internal reviews it is important to note that some lenders may have their internal reviews completed sooner than others depending on the size of their mortgage books and the complexities associated with them completing the examination.  

Last month, the Central Bank issued a statement which indicated that so far lenders had identified approximately 8,200 accounts where a right to, or the option of, a tracker rate of interest and-or the correct tracker rate of interest was not provided to customers in accordance with lenders' contractual or regulatory requirements. In his subsequent appearance before the Oireachtas joint committee, the Governor indicated that this is a lower band figure and that it is expected that the number of affected cases will be higher. The Central Bank continues to challenge lenders to ensure that progress is being made, but at this point there is no further update to hand on the information provided by the Governor on 20 December last.

In the performance of its supervisory functions, the bank identified and pursued issues in regard to transparency with specific lenders for borrowers who opted to switch from their tracker rates or who had the right to revert to a tracker rate at the end of the fixed rate period. However, as new issues continued to emerge, the Central Bank decided that a system-wide review was necessary to ensure that all lenders are acting in their customers' best interests. As a result, the tracker mortgage examination was commenced by the Central Bank in 2015. This examination is now the most significant supervisory review the Central Bank has undertaken in the context of its consumer protection mandate.   

As the statutory enforcement authority for regulated financial services providers, it is the independent responsibility of the Central Bank to ensure appropriate institutional and individual accountability where there is sufficient evidence to support such action. As Minister, I do not have any function in such considerations. Nevertheless, the Central Bank has indicated it will take appropriate supervisory action, including enforcement action against lenders and persons concerned in the management of those lenders, where relevant, to ensure that fair outcomes are achieved for consumers where applicable regulatory standards are not met. The Central Bank recently entered into a settlement agreement with Springboard Mortgages limited, issuing a reprimand and imposing a fine of €4.5 million. However, the Central Bank has advised me that it cannot comment on ongoing enforcement investigations. 

The Central Bank continues to monitor lenders' progress in respect of the conduct of the examination through direct engagement with each lender and its appointed external independent party and through on-site reviews and review of regular progress reporting. The bank is committed to providing regular progress updates on the examination and these will be available on its website.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his reply. The numbers which emerged during the course of the hearing to which I referred are much higher because the figure of 8,200 excludes customers from Permanent TSB and an older Bank of Ireland issue going back to 2011. The Governor acknowledged that 15,000 mortgage customers could be affected.

I would like to know how the same mistake was made by AIB, Bank of Ireland, Permanent TSB and Ulster Bank. We know what happened in some banks, but we do not know about other lenders. This was systemic and widespread across all of the main lenders in the State. Why, when these mistakes happen, do they always happen in a manner that is adverse to the customer?

Serious questions need to be asked and answered because this is a scandal. Mortgage customers have been treated disgracefully, and the Central Bank will have to fully exercise its statutory power in order to ensure that this issue is dealt with comprehensively. Fundamentally, we need to know how this happened, why it happened and who knew about it because the issue was widespread, which the Governor accepted.

Michael Noonan (Limerick City, Fine Gael)
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It is a very serious situation, as the Deputy has outlined. It is worse than was described by Deputy McGrath. Some 15 lenders are covered by the inquiry including Bank of Ireland, Permanent TSB, AIB, Ulster Bank, KBC, ACC Loan Management, Bank of Scotland, Danske Bank, Dilosk limited, Irish Bank Resolution Corporation limited, Leeds Building Society, Pepper Asset Servicing, Springboard Mortgages limited, Start Mortgages limited and Stepstone Mortgage Funding limited.

The Central Bank is inquiring into all of them and it will be up to it to come forward with proposals, but it stretches the bounds of coincidence that all these institutions would have arrived separately at a conclusion to proceed incorrectly.

Pearse Doherty (Donegal, Sinn Fein)
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I have raised this issue with every bank that appeared before our committee, the Central Bank and the Taoiseach. This is one of the biggest financial scandals that we have witnessed in recent times. The amount of money involved is massive. In excess of €100 million, and probably in excess of €200 million, will have to be restored by the banks, and that is just to give them back the money that the banks illegally took from them. It is a massive theft. I use that word for a reason. When we speak of redress schemes, we legitimise the fact that the banks say that it was a systems error or a problem with communication. That is not the case. Every single major bank in the State was doing the same thing. They took money they should not have taken from their customers.

Not only did they do that but they took the houses from a number of individuals. We estimate that more than 100 individuals have lost their family homes as a result of the actions of the banks. Others were bankrupted as a result of the process. What has happened is unbelievable, yet for many years the Central Bank did not pick up on it. Banks that we own fought their customers when they tried to raise this issue in the public domain. When they took it to the Financial Services Ombudsman, Permanent TSB, which the State owns, fought them in the High Court. When the High Court said that it agreed with the Financial Services Ombudsman and the customer, the bank said it would appeal to the Supreme Court.

The Central Bank needs to do its job. It needs to keep a proper eye on banks such as these which have swindled their own customers. It also needs to ensure that individuals are held to account. However, what has the Minister, who is the major shareholder in the banks, done? Has he asked the board of AIB why AIB took from 2,600 customers money that was not its money in the first place? Has he asked why it took the homes of some of our citizens when it should not have done so? Has he asked if there is any internal investigation being carried out to see if there are culpable individuals relating to this matter?

These are not private firms in the IFSC. Some of them are banks that we own. However, until we have individual accountability instead of a fine that is issued by the Central Bank, this practice will continue.

Michael Noonan (Limerick City, Fine Gael)
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I agree with many of the sentiments expressed by the Deputy. The Central Bank is carrying out a full inquiry across the lenders that I have specified. It has already reached agreement on a fine of €4.5 million with one lender, which is not a household name, and it is proceeding now with regard to others. It expects to have made significant progress by mid-2017. I know the Governor informed the Deputy when he asked whether the number of those affected could be as high as 15,000 that it might be, but he also said that he thought that might be a high estimate. However, it certainly will be more than 8,500.

As far as the role of the Minister for Finance is concerned, the Central Bank is independent under statute in the exercise of its functions. Any separate or parallel action by the Minister for Finance would be an interference in the independence of the Central Bank. I share the Deputy's sentiments, however. This was an outrageous situation. It is important to put on the record that the Central Bank has statutory reporting obligations to the Garda Síochána and to other agencies where it suspects a criminal offence may have been committed by a supervised entity. The Central Bank takes these obligations seriously and complies with them on an ongoing basis, as appropriate. However, this would be a matter for the Central Bank and the independent criminal investigation and prosecution authorities. I, as Minister for Finance, would not have any role in the matter.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I appeal to the two Members as our time is almost up and I want to give both of them fair play. I ask them to keep their supplementary contributions as brief as they can as I want to give the Minister a chance to reply.

Michael McGrath (Cork South Central, Fianna Fail)
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Unless there is genuine accountability for how this scandal happened, how it was allowed to continue and why it was not dealt with more quickly by the Central Bank, this will keep happening. The reality is that it is the customers who ultimately lose out. Many have lost their homes and many thousands of others continue to pay with each passing month hundreds of euro extra in interest that they should not be paying. That remains the case today in respect of customers that the banks know should be on a tracker rate.

Banks are saying that the tracker rate should be 3.67%. The tracker rate these people are being put back on is basically the variable rate. This is still going on and it is going on under the nose of the Central Bank, but there is no sense of urgency. I got no sense of urgency from the Central Bank when its delegates appeared before the committee in December. There are no deadlines for the banks to reinstate tracker rates to customers who were wrongly denied them. This is simply not good enough. The same people always end up losing and, unless there is accountability, it will keep on happening on our watch.

Pearse Doherty (Donegal, Sinn Fein)
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I respect the role of the Central Bank in terms of its regulation and the investigation it is carrying out, but that does not absolve the Minister for Finance. As the major shareholder in AIB and Permanent TSB, why is he not asking the board what for God it was doing when it stole all this money from 4,000 citizens and made some of them homeless? That is a responsibility, but it is also the human thing to do. This cannot be allowed to go unchecked but, unfortunately, it has until now. This story did not just emerge in the past few days. This has been going on for years and people have turned a blind eye to it, including those in the Central Bank. Now we find that it is not confined to the 86 customers that had cases before the Financial Services Ombudsman but possibly affects up to 15,000 individuals.

The Criminal Justice (Theft and Fraud Offences) Act 2001 is clear. It states: "A person who dishonestly, with the intention of making a gain for himself or herself or another, or of causing loss to another, by any deception induces another to do or refrain from doing an act is guilty of an offence." That offence is punishable by up to five years in prison. I could put any money on it with the Minister, and I hope I am wrong, but not one banker will be held accountable for what has happened.

Now is the time to introduce robust white collar crime legislation to ensure that bankers know that they will face the full rigours of the law if they do this to any one of our citizens or anyone else again.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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We are way over time. I call the Minister to give a brief response.

Michael Noonan (Limerick City, Fine Gael)
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The Central Bank has strong powers. The committee of the House invited the Governor of the Central Bank to attend one of its meetings and I understand the Governor had a good exchange with Deputy Doherty on 19 December. From reports in the media, that seemed to have been a satisfactory meeting.

My information from the Central Bank is that, based on current progress, it anticipates that relevant lenders will have been identified and engagement commenced with impacted customers by mid-2017, with payment of redress and compensation, processing and consideration of any appeals and the Central Bank's own assurance work continuing beyond this point for some lenders. The Central Bank therefore expects to see more lenders engaging with impacted customers over the next few months. It states that it was mid-2015 when it extended its inquiry and realised the seriousness of events and that it is proceeding with all expedition to sort it out.

If, as the Deputies stated, there are up to 15,000 individual customers, it will take a pretty long time to sort it out. However, it is being sorted out. We will see what conclusion the Central Bank reaches and whether it exercises its powers to refer this to the Garda Síochána. However, that is a matter for the Central Bank, which does not lack power. We always have an argument about people not having sufficient power. The Central Bank has plenty of power. The power is there and it is using it.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I thought my flexibility was generous but it obviously was not generous enough. I will, therefore, be strict with the time as we move on.