Pearse Doherty (Donegal, Sinn Fein)
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37. To ask the Minister for Finance if he will work with the Central Bank to ensure a deadline is set for all customers affected by the tracker rate mortgage scandal to receive full closure of their case along with redress and compensation; and if he will make a statement on the matter. [10016/17]

Michael McGrath (Cork South Central, Fianna Fail)
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40. To ask the Minister for Finance if he has had discussions with the Central Bank regarding their tracker examination; the status of the reinstatement of the correct tracker rate for the affected customers; if the Central Bank probe will involve examining the way this issue arose across the banks in the first place including, for example, the minutes of meetings; and if he will make a statement on the matter. [10411/17]

Pearse Doherty (Donegal, Sinn Fein)
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The question before us concerns the Central Bank and the absolute scandal that 15,000 customers have found themselves in whereby they have been denied tracker mortgages. Some weeks ago, Sinn Féin used our Private Members' business time to bring this matter to the floor of the House. The motion, as amended, has been passed. Part of that motion was that the Central Bank would have a deadline in place to resolve this issue. People need to see light at the end of the tunnel. They need to know whether they will be part of the redress programme. They also need to know the compensation they will have. It is incredible that, as we speak, people are still expected to pay over the amount they should be paying to their financial institution.

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 37 and 40 together.

The tracker mortgage examination is the most significant supervisory review undertaken in the context of the Central Bank's consumer protection remit.  It is a key priority for the bank and it is working to ensure that the examination is completed as soon as possible.

However, it is critical that each lender carries out a comprehensive and robust review, which achieves a fair outcome for all customers. While significant progress has been made, the Central Bank advises that due to the scale and complexity of the review, it will take some further time to complete.

Specific timelines have been set for all lenders to complete their internal reviews, and some lenders will 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. Based on current progress, the Central Bank expects that all relevant lenders will have identified affected customers by mid year and that they will progressively implement measures to address their situations with payment of redress and compensation. The processing and consideration of any customer appeals and the Central Bank's own assurance work is a process that may continue beyond that point for some lenders.

The Central Bank has set down a robust framework whereby lenders' internal reviews will be overseen by independent third parties. As part of the examination, the Central Bank has made clear what it expects of lenders in terms of redress and compensation to impacted customers, namely, lenders will ensure that harm is stopped at the earliest possible time once a group of impacted customers is identified, interest rates applied to impacted customers' accounts are to revert to the appropriate tracker interest rate or impacted customers are to be given the opportunity to revert to such a rate where relevant, redress should ensure that impacted customers are returned to the position they would have been in had lenders' failure not occurred, compensation that reflects the detriment suffered by the individual customer is to be provided by lenders and an additional payment is to be provided to the impacted customers to enable them to take independent professional advice regarding the redress and compensation offers made to them.

The framework of the examination has been designed to ensure that as and when groups of impacted customers are identified, in the first instance, the lender must stop charging the incorrect rate of interest on the customer's account to prevent any further detriment. The framework also requires lenders to establish an independent appeals process to deal with customers who are dissatisfied with any aspect of the redress package that they receive from lenders in respect of these matters.

The Central Bank has also advised that it will consider appropriate supervisory action, up to and including enforcement action, where necessary. All angles, including individual culpability, will be thoroughly investigated in the context of the legal framework. Enforcement measures will be deployed as appropriate, including investigating issues and taking cases under the Central Bank's administrative sanctions procedure together with the use of fitness and probity powers. Enforcement investigations of this type are detailed and forensic, routinely involving the scrutiny of thousands of documents and the conduct of interviews as part of the investigative process. To date the bank has concluded an enforcement investigation in respect of tracker mortgage failures identified at Springboard Mortgages Limited and imposed a monetary penalty of €4.5 million.

The Central Bank is also aware of the motion passed by Dáil Éireann on 26 January 2017 and it is noted that the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach will invite the Bank to attend before it on a quarterly basis regarding the examination.

Pearse Doherty (Donegal, Sinn Fein)
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I thank the Minister for his response. He mentioned that the Central Bank has noted our motion. In his correspondence or dealings with the Central Bank, has it indicated that it will do as this House has asked of it? It was asked to set a deadline for each financial institution so that there is clarity as to when individuals will be restored to the correct rate, when arrears, which should not have built up, will be rectified and when payments will be made to those individuals in respect of the redress.

One of the big problems here is that these banks have been caught out robbing their customers. I have used that word again and again and sometimes I use it to be provocative, but that is what they did. The big concern here is that 15,000 individuals have been robbed by the banks. They attempted to take approximately €800 million from these individuals but did not get away with it. What are we going to do? Will it be just a slap on the wrist, a case of putting the money back and a fine for the institutions? Where is the individual responsibility here? Even thought the Minister mentioned that individual culpability will be looked at I am not convinced that the Central Bank has carried out an investigation robust enough to actually look in those directions.

Michael McGrath (Cork South Central, Fianna Fail)
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A real wrong was perpetrated on people here and that is why Deputies in this House continue to raise the issue. It is not a Mickey Mouse issue. I will bring the Minister's attention to an e-mail we received during the week from a customer of KBC who said that he is paying €600 extra per month above what he should be paying and has been doing so for the last seven years. He has paid, over that period, €50,000 more than he should have. That is the scale of this for some people. It is absolutely enormous and it is life changing.

What really frustrates me is that we cannot get access to very basic information. In the case of each bank, how many customers have they reinstated to the correct rate? There is no deadline on the banks to do that. There was a deadline to complete the assessment of their customers, to identify the accounts and so on, but there is no deadline on the reinstatement of the correct rate for customers. Even where customers are being reinstated we now have the new phenomenon of tracker rates of 3.67% in the case of AIB and 3.25% in the case of Permanent TSB, which is a farce. It is still going on. That is the problem. It will continue to be raised here until we can get answers to some very basic questions, which are not being answered by parliamentary question or whatever other means. I assume the Minister is frustrated too because he is not dealing with it directly; it is the Central Bank. Will the Minister share his thoughts with us?

Michael Noonan (Limerick City, Fine Gael)
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I thought my answer was pretty full. To answer Deputy Doherty's question, specific timelines have been set for all lenders to complete their internal reviews. It is the most significant supervisory review undertaken in the context of the Central Bank's consumer protection remit. I assume, from the various answers I have given here, that when the Central Bank probed the matter, it found it was of a greater magnitude than had been expected and that it would have liked to have completed its work at an earlier date.

Since we talked about it here last, the Central Bank has assured me that it will be in direct contact with the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach. I do not know whether it has done that. It also assured me that it would communicate some of the information that was sought by Deputies here directly, by way of letter. It was also informed by my officials of the committee's request for the Central Bank to attend before it on a quarterly basis to review the situation.

I agree with the Deputies. This was a scandalous situation. The Central Bank is addressing it in a very forthright way now. It has no intention of hiding anything and it wants to co-operate fully with the Deputies in this House who so ably raised this issue. The best forum to deal directly with the bank, rather than through me as the Minister with ultimate responsibility for the bank, is through the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach.

Pearse Doherty (Donegal, Sinn Fein)
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The Minister mentioned that there are deadlines for each of the individual banks. None of that is public. If it is, perhaps the Minister will direct me to it. None of the customers knows that because they are ringing up to ask when they will be told what the redress scheme is, how they will be affected and when they will be back on the proper rates or proper payments. None of that is there so there has to be more forthright engagement from the Central Bank and the lenders with the customers. The reason we are questioning this here is because customers are being left short changed.

There is another question here and we really need to deal with it. I know it is sensitive, but we need to ask how the Central Bank missed this. We need to ask ourselves, as a country, is it expected that the Central Bank would have enough resources, enough power and enough personnel to make sure that this issue would not arise? The assumption out there is that there is a consumer protection role. The Central Bank investigated this in 2011. It found one bank which had to restore more than 2,000 individual to tracker rates, yet five or six years later we have another 13,000 individuals. There are genuine questions we need to ask about the Central Bank, not just about its role in overseeing what is an internal bank-led review, which is wrong in itself.

Michael McGrath (Cork South Central, Fianna Fail)
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Just to clarify, there is no deadline on putting customers back on the correct rate. There is a deadline for the banks to complete their assessment of their mortgage books, but we have it in writing from Bank of Ireland that no deadline has been imposed by the Central Bank on putting customers back on the correct rate. The priority now has to be ensuring that customers who were contractually entitled to a tracker rate are not on a made up tracker rate of 3.67% but, rather, a tracker rate that is relevant to the contract into which they entered initially.

Beyond all of that, we need to know how this issue was handled within the banks when they became aware of the problem. Not a single bank put up its hands, said it had found a problem and that it would address it. In each case, it was forced upon them by way of customers taking cases to the ombudsman or to court and the Central Bank eventually becoming involved. How is it that when this issue was first brought to the attention of banks or they identified it they did not put up their hands and deal with it?

I hope the Central Bank will go back to the minutes of meetings when the issue was discussed and examine the decisions that were made by banks not to confront and deal with the matter at that time. If the Central Bank is to carry out a proper probe, that is the level of detail into which it needs to go because the investigation has to be a watershed moment for the Central Bank and our banking system. If we cannot take issues at trust, we need to use the full powers that are at the disposal of the Central Bank.

Michael Noonan (Limerick City, Fine Gael)
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There are four questions. In response to Deputy Doherty, the Central Bank, unlike Government Departments, decides on its staff complement and can increase it if it feels it is necessary to do so in order to fulfil its legal requirements. Given that it is a bank, it is very well funded. Each year it transfers a lot of excess profits to the Exchequer. Funding extra staff is not a problem.

Deputies Doherty and McGrath asked about the process. I have a note with information from the Central Bank. Once a customer who has been affected has been identified in the first instance, the lender must stop charging the incorrect rate of interest on the customer's account and then communicate this to the customer to ensure that any further customer detriment is stopped as early as possible. Once a full review of the customer's account is complete, and following external independent third-party assurance, the lender will then issue a letter to the customer explaining the nature of the error, the correct rate to apply to the customer's account and information on the next steps in the examination, including the redress and compensation process.

In response to Deputy McGrath's last point, the Central Bank has also advised that it will consider appropriate supervisory action, up to and including enforcement action, where necessary. All angles, including individual culpability, will be thoroughly investigated in the context of the legal framework. Enforcement measures will be deployed, as appropriate etc. as I stated in my original reply.