Michael McGrath (Cork South Central, Fianna Fail)
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7. To ask the Minister for Finance the actions taken by the Central Bank in relation to the placing of 2,141 SME companies in the Global Restructuring Group, GRG, by a bank (details supplied); his views on whether there is scope for a formal review by the Central Bank; and if he will make a statement on the matter. [50798/17]

Pearse Doherty (Donegal, Sinn Fein)
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32. To ask the Minister for Finance if he has discussed with the Central Bank the actions of a bank’s (details supplied) restructuring group; his plans to do so; and if he will make a statement on the matter. [50886/17]

Michael McGrath (Cork South Central, Fianna Fail)
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This issue relates to Ulster Bank's Global Restructuring Group, GRG, in Ireland. Between 2008 and 2013 over 2,100 SME customers were put into GRG, with loans of between €1 million and €25 million and a total portfolio value in the region of €14 billion, I think, but I will have to double check that figure. The issue is the role of the Central Bank in dealing with the complaints submitted to Ulster Bank about its GRG process in Ireland.

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 7 and 32 together.

I am informed by the Central Bank that, while it cannot generally comment on interactions with regulated firms, the Ulster Bank Ireland designated activity company is engaging with the bank in relation to this matter.  As the Deputy is aware, in November 2016, RBS announced a new complaints review process overseen by an independent third party and the automatic refund of fees to SME customers in the Global Restructuring Group, GRG, in the United Kingdom and Ireland between 2008 and 2013. In February this year Ulster Bank sent letters to SME customers who were in this group between 2008 and 2013. The letters informed them about the new GRG complaints review process and whether they were included in the automatic refund of fees. Ulster Bank has indicated that a large proportion of its customers have now been contacted. The Central Bank encourages all GRG customers who have concerns or issues to fully engage with the complaints process. More information is available at: .

I am confident that legislative changes since the financial crisis have equipped the Central Bank with the necessary investigative, regulatory and enforcement powers to ensure regulated financial service providers adhere to the requirements of financial services legislation. In addition, the Central Bank is proactively regulating the financial system and has issued regulations aimed at protecting SMEs when dealing with regulated and unregulated firms. The revised SME regulations introduce specific requirements for regulated lenders, including contacting and warning SME borrowers and expanding the grounds for appeal. Under the regulations, regulated financial services firms must have a complaints handling procedure in place. Complaints against financial institutions should first be discussed with the institution concerned. The Central Bank will continue to monitor and engage in this matter.

Michael McGrath (Cork South Central, Fianna Fail)
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The central allegation is that the GRG was something of a graveyard for businesses and that Ulster Bank, much like Royal Bank of Scotland, RBS, in the United Kingdom, acted inappropriately and very aggressively in the appointment of receivers and liquidators, with the ultimate objective of gaining control of the assets of the underlying business.

That is the central allegation. Last month the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, received an update from Ulster Bank. Ulster Bank in Ireland has received 48 complaints at this stage as part of the Global Restructuring Group complaints process and, as of last month, had paid out just €362,000. What is the Central Bank doing on this issue? The Financial Conduct Authority in the United Kingdom undertook an investigation. The Central Bank knows that Ulster Bank engaged in wrongdoing in the treatment of customers in the GRG. As the regulator, what has it done to deal with the issue?

Paschal Donohoe (Dublin Central, Fine Gael)
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I confirm that the Central Bank of Ireland is now engaged in this matter. It would not be appropriate for me to indicate what the status of this engagement is, nor can I do so, because the bank is leading that work as the independent Central Bank of Ireland. The Deputy will be aware of the legal protections in place for firms which have been affected by this issue. They include the Consumer Protection Act 2015 which was passed this year to deal precisely with protection gaps for firms the loans of which are sold by the original lender to an unregulated firm. As I indicated, the Central Bank is engaged in this matter and while I know that it is a serious issue, it would not be appropriate for me to answer on the bank's behalf about the work it is doing, nor can I do so.

Pearse Doherty (Donegal, Sinn Fein)
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I have been raising this issue at the joint committee on finance for a couple of years. I also brought it to the attention of the Taoiseach on the Order of Business last week. This is another scandal involving 2,141 Irish companies being placed with the Global Restructuring Group, which basically was death row. Ulster Bank informs us that fewer than 100 of these companies came out of the process alive, while other reports suggest only six survived.

The Minister referred to compensation and other matters. Ulster Bank has acknowledged wrongdoing in the application of complex fees. However, this is only one aspect of the issue. In Britain, where the Financial Conduct Authority is continuing its assessment, we know that the authority's interim report summary found, among other matters, that the GRG had placed "an undue focus on pricing increases and debt reduction without due consideration to the longer term viability of customers". It also found a "failure to handle the conflicts of interest inherent" in the structure and operation of West Register, GRG's property arm. Even the name, West Register, was duplicated by Ulster Bank and the experiences of Irish businesses have been the same as those investigated by the Financial Conduct Authority. Has the Minister discussed this issue with Ulster Bank? Is he willing to engage with the victims of GRG to hear at first hand their experiences at the hands of a bank that is regulated in the State?

Paschal Donohoe (Dublin Central, Fine Gael)
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No, I have not discussed this matter with Ulster Bank. The reason is that this matter and the work being done on it are being handled by the Central Bank. I must recognise the authority and role of the Central Bank in the matter. Given its seriousness, I first want the Central Bank to conclude the work under way before I make any further comment.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his reply. I respect the independence of the Central Bank and it is true that while matters are ongoing, it does not disclose actions relating to individual institutions. However, Deputies deserve some more information on what the word "engaged" means in this context. The Minister has indicated that the Central Bank is engaged in this issue. We know what the bank's role is, what its statutory powers are and what harm has been done in this case. Deputy Pearse Doherty outlined some of the allegations made. While a start has been made in refunding complex fees in Ireland, that is not the full story. Although the Financial Conduct Authority in the United Kingdom did not uphold some of the most serious allegations made against Royal Bank of Scotland, it certainly found much evidence of inappropriate behaviour. There is no reason to suggest the same practice was not evident in Ireland in the case of Irish borrowers of Ulster Bank. The central allegation is that GRG was essentially a graveyard for businesses which went into the group but did not come out again. We need transparency, answers and accountability in that regard.

Paschal Donohoe (Dublin Central, Fine Gael)
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I am aware of the Deputies' views on this matter and the way in which the issue has unfolded and been dealt with in the United Kingdom. I am also aware of the consequences for many of the companies and firms that dealt with the group. There may be a point in the future at which I or the Central Bank can say more about the work the bank is doing, but I cannot do so while the work is ongoing. I am well aware of the seriousness with which the Deputies view the matter, but I expect that given that they are hoping to see progress made on the issue, they will also understand the only organisation that has and should have the power to do this work is the Central Bank. Before I comment further on the matter, I must allow it to do its work, at which point it will also comment.

Pearse Doherty (Donegal, Sinn Fein)
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I too value and respect the independence of the Central Bank. However, it was also behind the curve on this issue, which is not new. I acknowledge that the Central Bank and Ulster Bank are engaging, whatever that word means in this context. It could mean, for example, that they are engaging on the fees structure, which is at the minor end of what has been alleged about GRG, or that they are asking whether GRG organised strategic defaults to put viable Irish businesses into liquidation, thereby collapsing them, imposing serious hardship on the directors and families concerned and putting many thousands of workers out of work. That is what lies at the heart of the allegations. When the finance committee started to deal with this issue, the Central Bank was not involved in any engagement or taking any action, but the committee pushed it in that direction. We will have a module on the activities of Irish banks on this issue at the start of 2018.

I reiterate the question I asked the Minister. I welcome his engagement last week with victims of the tracker mortgage scandal. Will he also engage or is he open to engaging with victims of GRG - the businesses that were put to the wall as a result of its activities - in order that he will be better informed on the full consequences of the group's actions?

Paschal Donohoe (Dublin Central, Fine Gael)
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I met victims of the tracker mortgage issue after the Central Bank had done a substantial amount of work in dealing with the issue. As that work was unfolding, I met a number of people who were affected by the issue because I believed it was the appropriate thing to do. I am open to engaging with people on this matter in the near future. However, given the Deputy's recognition of the independence of the Central Bank, he must also understand that before I engage further in this matter, I must allow the Central Bank to conclude important work that is under way. I know that it is endeavouring to do so.