Tracker Mortgages: Statements

I remind Senators that group spokespersons have six minutes and all others have five.

I thank Senators for raising the important issue of tracker mortgages. The fair treatment of customers is a key requirement of the financial services regulatory framework and of the Central Bank consumer protection code. The code requires all residential mortgage lenders to act honestly and fairly in the best interests of their customers and not to mislead customers about the products they provide. It also requires lenders to make a full disclosure of all relevant information to a consumer in a way that seeks to inform the consumer and enable him or her to make an informed decision before entering into or changing a loan or other financial services agreement. However, it has now clearly been demonstrated that mortgage lenders have significantly failed in their regulatory or contractual responsibilities to many of their tracker mortgage borrowers.

The Central Bank has long warned lenders of their duty to act in the best interests of their customers when recommending that a borrower switch from a tracker mortgage to another type of mortgage product. The Central Bank specifically provided in the code of conduct on mortgage arrears that mortgage lenders must not, except where it would be in the interest of the borrower, require a borrower to change from an existing tracker mortgage to another mortgage type as part of an alternative repayment arrangement to address a mortgage difficulty. Over time, the Central Bank identified and pursued a number of tracker-related issues with some lenders. These included issues ranging from a lack of transparency for the borrower, a failure to fully inform customers of the consequences of switching from a tracker mortgage, the application of incorrect tracker rates and a failure to afford customers their contractual entitlements to specified tracker interest rates. Separately, individual tracker-related complaints were also presented to the Financial Services Ombudsman and that office was making determinations on the cases, some of which were also coming before the courts. In addition, due in part to these developments, the matter was coming to greater public attention more generally. In total, the Central Bank identified in the region of 7,100 mortgage accounts where tracker failure was identified and in respect of which mortgage borrowers were adversely impacted upon prior to the commencement of the bank’s industry-wide tracker mortgage examination.

Having regard to these developments, and to Central Bank concerns that there may be other tracker-related issues that could be impacting upon other consumer borrowers across the system, the Central Bank announced in October 2015 that it had commenced a broader, industry-wide examination of tracker mortgage-related issues. This systems-wide review was intended to cover, among other things, transparency of communications with, and contractual rights of, tracker mortgage borrowers. This examination has turned out to be the largest review ever carried out by the Central Bank on its consumer protection side. It covered 15 mortgage lenders that may have sold tracker mortgage products to consumer borrowers from the time they commenced selling tracker mortgages until December 2015. As such, it covered banks and other regulated mortgage lenders and also lenders that are no longer providing new mortgage credit. It also covered mortgages that have been redeemed or borrowers whose tracker mortgage has been transferred to another creditor. The industry-wide examination required all lenders to examine the extent to which they had been meeting their contractual obligations to their tracker mortgage customers or their compliance with their obligations under the Central Bank’s consumer protection code and other consumer protection regulatory requirements.

Under the initial phase of the industry-wide examination, the Central Bank required lenders to put in place governance structures and systems to conduct a comprehensive examination. The second phase of the examination involved an extensive internal review of mortgage books to identify mortgage borrowers who were impacted by banks’ failings. This phase was due to be finalised at the end of September. In its latest update on progress on the tracker mortgage examination, as published last month, the Central Bank indicated that 13,000 affected mortgage borrowers had so far been identified, although it was also noted that this number was expected to increase. In particular, the Central Bank noted that it is continuing to challenge lenders on the number of affected customers. As Senators are now aware, on 9 November last, Bank of Ireland accepted that it had a further 6,000 affected tracker mortgage accounts.

This is in addition to the 4,300 it had earlier accepted arising from the Central Bank examination and the previous 2,100 accounts identified prior to the industry-wide examination. These 6,000 additional accounts are groups of customers that the Central Bank has identified as having been impacted but which Bank of Ireland had previously disputed. KBC is another bank which has recently said that it is continuing to engage with the Central Bank on the identification of impacted customers. The Central Bank has stated that the number of impacted accounts as of the end September will increase in light of the recent announcement by Bank of Ireland and that it may increase further as it continues to challenge mortgage lenders.

The two other phases of the Central Bank examination cover the calculation and the payment of redress and compensation for impacted customers. When the Central Bank published its update report last month, payments amounting to €120 million had been paid to 3,300 impacted customers, as identified from the recent industry-wide examination. This is additional to the €43 million in compensation and redress paid for impacted cases identified before the commencement of the Central Bank industry-wide examination.

When the Minister for Finance met the chief executives of the five main banks at the end of October he made it very clear to them that all affected customers are to be identified and that the wrong is to be put right through the payment of appropriate redress and compensation without any further undue delay. Following on from those meetings, the banks also committed to the following. AIB is to pay redress and compensation to over 4,100 of its customers before the end of this year; Bank of Ireland is to pay redress and compensation to the 4,300 of its customers that they accepted had been impacted at that point - as indicated above. Since then Bank of Ireland has accepted that a further 6,000 mortgage accounts have also been impacted and payments in respect of these accounts is now also to start before the end of 2017.

PTSB is to pay redress and compensation to almost 2,000 customers before the end of this year and Ulster Bank is to pay redress and compensation to 1,000 customers before the end of this year and to the bulk of its remaining impacted borrowers in early 2018. KBC also said that all its customers so far identified as having been impacted have been or are in the process of being contacted and that redress and compensation payments have commenced. The payment of redress and compensation to impacted borrowers without any further delay is now a key requirement as it will be a practical reflection of the regret that banks are now expressing for the harm they have inflicted on their impacted borrowers.

The payment of redress and compensation serves two different functions. Redress is intended to return the borrower to the position he or she would have been in if the harm had not occurred. In effect, the banks are giving back money that was wrongly taken from the borrower. Compensation is additional payment and it is intended to reflect the detriment to the borrower which arose from being put on the incorrect interest rate. While the Central Bank cannot formally require lenders to implement uniform redress and compensation programmes, it nevertheless has repeatedly challenged lenders on their proposals. The tracker examination framework clearly set out the Central Bank’s expectations that appropriate redress and compensation is to be provided to impacted borrowers. Lenders are also to categorise impacted customers by reference to the type and level of detriment suffered and to ensure that compensation is proportionate to the level of harm which was incurred. The types of detriment identified range from overcharging due to the application of incorrect interest rates, which at the lower end of the scale may have only been a small difference and for a short period of time, to failure to return a borrower to a tracker rate after a period where the interest rate was fixed and up to cases of more significant harm, such as a loss of ownership of mortgaged properties. A higher level of compensation would be expected in cases were a severe level of harm has been inflicted on a customer.

Some people have said that a uniform redress and compensation approach to the payment of compensation should be put in place by the Central Bank for all banks. A uniform redress and compensation approach could fail to address an individual’s particular circumstances adequately as personal circumstances and experiences will differ. A uniform redress approach could also mean that it would become the de facto maximum level of payment across the system and that it could prevent or inhibit lenders from putting in place a somewhat more generous package for its their impacted borrowers. Overall the approach to compensation adopted by the Central Bank is the one which is available to it under the existing law, which places the onus on lenders to produce schemes for their own affected customers. However, the Central Bank reserves the right to challenge lenders in particular cases if it considers it necessary or appropriate to do so. The principles for redress set out by the Central Bank also provide for the general upfront payment of redress and compensation to all impacted borrowers. This upfront payment, however, does not preclude or prevent the borrower from appealing the level or any aspect of compensation if he or she does not consider that it is appropriate to the harm that was inflicted in his or her particular case. Regardless of the outcome of an appeal, the initial payment cannot be reduced.

Two types of appeals panels are to be set up by each lender as part of the tracker framework process. The first is intended to deal with the more serious cases of harm and the panel membership is fully made up of members independent of the lender. The second appeals panel is intended to hear cases where the level of harm is not as serious and the majority of the members on this panel are also independent of the lender. Impacted borrowers also have the further right to appeal their case or circumstances to the statutory independent Financial Services Ombudsman or to the courts. It is worth repeating that a fundamental element of the redress and compensation process is that the upfront payment which is made by a lender cannot be reduced by any subsequent appeal that may be made by the borrower, either to the appeals process under the tracker examination framework or ultimately the ombudsman or the courts.

The approach to the payment of redress and compensation is designed to deliver the most efficient process in the interests of impacted borrowers. Upfront compensation frameworks are determined by lenders, although subject to Central Bank challenge, and provide for the making of payments as quickly as possible. The detailed appeals process allows borrowers to take the matter further without risk to them if they consider that the level of the upfront payment is not appropriate in their particular case. This appeals process then allows the individual borrower to set out his or her individual circumstances and to set out in detail the full harm which was imposed on him or her by the lender and, consequently, why a higher level of payment is appropriate in that case.

On enforcement, it will also be important to hold the banks to account for their actions. The existing supervision and enforcement powers of the Central Bank are strong and should be used to punish wrongdoing where supported by evidence. Thus far, the Central Bank has imposed a monetary penalty of €4.5 million on Springboard Mortgages Limited for serious failings in its obligations to its tracker mortgage customers. The Central Bank is also pursuing enforcement investigations regarding Permanent TSB, Bank of Ireland and Ulster Bank Ireland.

The Central Bank is also liaising with An Garda Síochána and other relevant statutory bodies, such as the Competition and Consumer Protection Commission, and it has statutory reporting obligations to An Garda Síochána or another relevant statutory agencies where information obtained by it at any stage prior to, during, or after an investigation, gives rise to a suspicion that a criminal offence may have been committed. The Central Bank takes its reporting obligations, as provided for under section 33AK of the Central Bank Act 1942, very seriously and complies with them on an ongoing basis as appropriate. The Central Bank has met An Garda Síochána and has discussed at a high level what it has seen and while it has not made a formal statutory section 33AK report of suspicions to other relevant agencies it is keeping the matter under constant review. The Central Bank has also engaged with the Financial Services Ombudsman with regard to the welcome amendments to the time periods for customers to make complaints to the ombudsman pursuant to the Central Bank and Financial Services Authority of Ireland (Amendment) Act 2017. This legislation now extends the time limits for long-term financial services beyond six years to permit complaints to the ombudsman within three years of the customer becoming aware of the cause of complaint.

The Government will be monitoring the progress and outcome of this important Central Bank examination very carefully and it has concluded that follow up actions will be pursued if the main banks do not meet the updated commitments made to the Minister for Finance. I look forward to an update being provided by the Central Bank to the Minister for Finance in mid-December. However, it is clear at this point that some tracker mortgage customers have been treated disgracefully by mortgage lenders and many borrowers have incurred considerable loss; in particular where they have directly or indirectly lost their homes due to this harmful action by lenders.

I assure the House that the Government is fully aware of the seriousness of this matter and it wishes to have adequate redress and compensation provided to impacted customers as quickly as possible. At this point the Government wishes to support and encourage the Central Bank to complete its tracker mortgage examination investigation as quickly as possible.

I remind the House that speakers are allocated six minutes each. As we must finish by 2.40 p.m. in order to allow the Minister of State to respond, it will be a tight fit. We are scheduled to have the five main spokespersons speak.

Can I clarify at what time we are finishing?

We have to be finished by 2.45 p.m. The next item will be taken then. The Minister of State will reply at 2.40 p.m. I ask Senators to be as brief as they can. Unfortunately I will have to adhere to the time strictly.

I thank the Cathaoirleach. I understand that we are a bit constrained by other business. I will try to be as brief as I can. I thank the Minister of State for being here. I also thank the Leader. I called on him to arrange a debate in the Seanad on tracker mortgages during the Order of Business at one point. All of us here, or certainly a very significant number of us including Senators Kieran O'Donnell, Rose Conway-Walsh and indeed, previously, the Minister of State, were discussing this issue in the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach as far back as last December and earlier.

I welcome the opportunity to speak on the issue of tracker mortgages today. Fianna Fáil supports the thousands of customers who have been denied their contractual right to return to the tracker mortgage rates and the customers who were put on incorrect tracker rates. Bank of Ireland recently announced that a further 6,000 customers were affected by the scandal on top of the 13,000 customers identified by the Central Bank examination, as reported in October. It is frustrating that these were contested accounts which Bank of Ireland did not originally want to admit to, although it has now put its hands up and said that these customers are to be included and were treated incorrectly by the bank.

On 25 October Fianna Fáil brought forward a motion in the Dáil calling on the banks to fully identify all customers affected by the scandal, to instantly restore all affected customers to their appropriate rates, and to pay redress and compensation to all victims without further delay. It called on the banks to provide adequate housing to those who have lost their homes. It is important that we remember some people lost their homes as a result of being put on the wrong rate and of being dealt with inappropriately and not in accordance with their original contracts. It also called on the Government to consider introducing wide-ranging legislation to tackle the regulatory issue, including legalising class action suits and empowering the Financial Services Ombudsman to decide on compensation and redress levels. The motion also calls on the Government to threaten to vote against the board of directors in each of the banks in which the State still has a shareholding.

The Minister met the banks on 23 and 24 October and they released statements on 25 October in respect of their individual examinations. It is still unclear what the Minister said to the banks on this issue. If enforcement orders by the Central Bank are the only outcome of this examination it will not be a satisfactory result. We need personal accountability and a solid explanation as to why 11 institutions acted in precisely the same manner in respect of the scandal. It is fairly difficult to believe that there was not some element of collusion or cartel-like behaviour in what was going on. How could every bank have made the same mistake with their customers in respect of the same type of product?

In early October 2017 the Central Bank published its second update before the Minister's meeting with the banks. According to the Central Bank, the number of customers affected stood at 13,000 at that point although, as we know, the figure is set to increase. With the 6,000 extra customers of Bank of Ireland, we are already very close to 20,000. It is likely that figure will rise further.

It is concerning that there appears to be a contest taking place between some of the banks and the Central Bank, in which banks are arguing that some customers should not be recognised as having been treated badly. As we saw Bank of Ireland contested 6,000 customers. When these customers were announced last month it doubled the number of affected accounts. On 19 October, Central Bank figures appeared before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. It is galling to learn that the banks unofficially threatened the Central Bank with legal action. This is despite all that has transpired with this scandal and the fact that the Irish taxpayer bailed out these banks.

The findings from the Central Bank update are as follows. It believes that two lenders have failed to properly identify affected customers; the lenders’ initial proposals for redress and compensation fell well short of the Central Bank’s expectations and they had to be pressurised consistently to bring them up to an acceptable level; two lenders did not complete phase 2 in a comprehensive manner on time and have much more work to do; the number of customers and tenants who lost their home stands at at least 102 and is set to rise further; the Central Bank imposed enforcement fines on Springboard Mortgages last year; and the Central Bank has commenced enforcement investigations against both Permanent TSB and Ulster Bank.

This scandal is completely unacceptable from the banks yet no credible explanation has been provided as to why this happened in all of the banks at around the same time and in the same way. Despite the banks acknowledging the scandal, they have been incredibly slow to rectify it. Only 40 of the 3,500 Ulster Bank mortgage holders have gotten their money back while KBC have yet to even contact some of its customers and to comply with phase 2. KBC confirmed that it missed the Central Bank's deadline to the committee of which I am Vice Chairman.

Padraic Kissane, a financial consultant who represents many of the victims affected, appeared before the committee. He believes the figure will be much higher in the end, perhaps closer to 30,000, but it remains to be seen if this turns out to be the case. The Governor of the Central Bank indicated that the total number could be at least 20,000. Either way, a very significant number of households, families and individuals have been affected by this.

The effect on mortgage holders' lives is incalculable and in many cases no amount of compensation will be enough to fully come to terms with the pain and suffering caused. As we said, some have lost their homes and many have lost their lives. The stress and suffering that has been added by the banks refusing to take responsibility is shocking. A homeowner, Thomas Ryan, came before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and told us that he suffered a stroke at the age of 47 and that his wife had a nervous breakdown. They contend that this was a direct result of what happened to them.

Fianna Fáil has long been calling for the banks to take responsibility. If the boot was on the other foot the banks would be tracking customers down for every last cent. Why is it that the banks must be dragged kicking and screaming to pay back this money? The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has worked well in exposing much of the issue. As I have mentioned, we have been questioning the banks very thoroughly and they will be before the committee again in January. Some banks are taking the matter more seriously than others but the fact remains that money was wrongfully taken from customers and now needs to be paid back once and for all, and quickly. The priority must be to ensure that those affected will receive restitution as quickly as possible and that the Central Bank moves through the various stages of its process to ensure customers will be treated fairly. We will certainly do our job as committee members in interrogating and dealing with the banks.

I appreciate that we are having the debate. I thank the Minister of State for being here and I again thank the committee for its work. There are switchers, however, who have not been contacted yet - people who switched mortgages and with whom the banks have not dealt. The banks say they do not know who they are or where they are. An individual contacted me after seeing me in the committee and said that his compensation, before redress, will be at least €200,000. That is an enormous amount of money for an individual to be without. He has suffered and his family have suffered. It is a very important issue and I am glad we are discussing it today.

I will be as brief as possible. My colleague has covered most of the things I wished to say. One concern I have is that we seem to be talking more about Ned Kelly than the respectable banks the Minister of State and I once knew. I am quite concerned that somewhere along the line these gangsters must have come together and agreed that they would all apply the same principle on tracker mortgages to their customers. There is an internal process for the banks to identify affected customers. My understanding of the instruction is that internal process is not just to be independent of the bank, but that there is to be no conflict of interest, either actual or perceived. If one considers an actual conflict of interest, one would assume that the internal process is not to be carried out by some accountancy or consultancy firm which has worked for the bank before. What about work such firms might take on the future, however? What about the promise of a big contract at the end of the process?

I want to see people who overpaid on their mortgages get the money they overpaid returned right now. I do not want to see them get their compensation now because I want the courts to rule on compensation where court cases are running. They can set the benchmark for compensation, not the banks. We have seen the way these crooks have treated their customers. There are people who have struggled to maintain homes while these mortgages were being overpaid and my fear is that the carrot of a quick few bob now might settle their claims much more quickly than if they were given the option to take their cases before the courts. As we do not have not have class actions in this country, let us get a couple of court cases under our belts and see what the courts deem to be a proper level of compensation. Then let us benchmark claims to that. Let us not allow the banks to negotiate with the ordinary individual who has been struggling for some years while the banks have been screwing them having given them the wrong mortgage rate.

On the collusion element, I want to know why An Garda Síochána are not in every single bank now. Why is the Director of Corporate Enforcement not looking at the directors of these banks? There are people on these boards to represent the public interest. Where are they? What have they got to say on this? Why have they not been hauled in to explain the situation to the Minister instead of bringing in the CEOs?

With the best will in the world, the Department of Finance does a good job. These CEOs have treated this country in an appalling way. They lied in 2008 when this country was going down the tubes. They tried to convince the Minister that everything was fine. The Minister of State, Deputy D'Arcy, sat on the banking inquiry and he gave it his attention every single day. He was there all the time, as were Senator O'Donnell and others, and they have to be commended on the amount of work put into it. The Minister of State knows more about how these banks behave than any of us. We need to be in there and to see exactly how banks define who is owed money. We need to see what companies are assisting them and if there is a conflict of interest, whether perceived or actual, we need to remove companies from the process. Very few companies in this country are big enough to do the type of work we are talking about and I fear that they have all worked for the banks at some stage in the past. I will not delay this debate because I know we have to try to finish things, but that is what I would like the Minister of State to take on board.

I welcome the Minister of State, Deputy D'Arcy. I commend the great work he does in the area of banking. I want to deal with where we are now and what we can do. The banks are being dragged, kicking and screaming, into addressing the tracker mortgage issue. Something that brought that to the fore was four witnesses coming before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, who were compelling. The Minister met with the banks and the banks largely committed to have compensation and redress under way before the end of the year. Does the Minister of State have any update on where it stands at this moment? When does he expect to meet the banks before the end of the year to find out precisely where we stand?

At the European Parliament Committee on Economic and Monetary Affairs yesterday, Mr. Brian Hayes, MEP, asked Commissioner Vestager about cartels with regard to interest rates in Ireland. It is high-time that the Competition and Consumer Protection Commission looked into that issue. There is a view among the public that a cartel operates between the main banks. That has to be investigated. The competition authority or, as it is now called, the Competition and Consumer Protection Commission, is the authority to do it. It has stated previously that the mortgage market in Ireland is dysfunctional. It owes it to people, considering the rates they are paying, to look at the matter. The Government has indicated that legislation for white-collar crime is coming in and that needs to be expedited.

I heard both the Minister of State, Deputy D'Arcy, and the Minister, Deputy Donohoe, mention the possibility of class action legislation. We need to look at that. We cannot allow the banks to behave in the way that they have with tracker mortgages. I meet people on a regular basis in the Limerick constituency. A lady contacted me in the past two weeks after she was visited by an individual on behalf of a bank, who had a letter, at 6 o'clock on a Friday evening when she was on her own in the house. She was petrified. That is not on. This person arrived to drop in something for her former partner and she rang me in a panic. I had to put her in touch with a personal insolvency practitioner, PIP, who could make contact with the bank to bring some sort of reason to the matter.

It now looks, from investigations, as if people who were on tracker mortgages agreed to go to a fixed rate on the basis that they would return to a tracker rate. There now also appears to be a category where people were on trackers and were put on variable rates without even being told by the banks. This was done by all the banks. It has to be asked why this was done. The banks cannot be above the law. In some cases, it could make a difference on an average mortgage of approximately €200,000 of approximately €4,000 a year in mortgage repayments with regard to how banks fiddled with interest rates. We need to have closure and people are entitled to payments of compensation and redress.

The intervention by the Minister should not have been necessary but I felt it was appropriate at the time, and I think a further intervention will be needed. When does the Minister of State expect that will happen? Every person with a tracker mortgage is an individual with a family who is under pressure from the banks. Is it not quite ironic that these same people, the taxpayers, bailed out the banks in the years after 2008 while, at the same time, these banks were ripping them off with high interest rates? It is a bit like going into a show or nightclub where one has to pay going in the front door and again when leaving. It is incredible that the banks think they can get away with it. Their approach and mentality is like that for whatever reason. In 2008, in either the committee that dealt with finance or economic and monetary affairs, I asked for the banks to come in because there was no lending to small and medium-sized enterprises. That was in July 2008 and all the banks said things were fine. The only one to cry that day was Richie Boucher, who said the banks had a problem. The banks then came and took taxpayers' money and are now ripping them off again. We need to bring closure to this and ensure that it never happens again.

I thank the Minister of State for being here. As a member of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, I found it very frustrating to try to get positive results for those customers affected by the tracker mortgage scandals. The growth in the number of those affected was particularly annoying. Those banks claim that it took them time to identify all those who were removed or denied and not informed of their entitlement to a tracker mortgage. I know the matter of people's entitlement to a tracker mortgage would be of interest with regard the case that was recently brought against Permanent TSB by O'Dwyer Solicitors in Ballymun. That case was settled for a substantially larger amount than was originally offered. The basis of it was that people were wrongly not allowed to avail of a tracker mortgage.

Many people are in that situation and perhaps the Minister of State can clarify the position for us. If a bank was offering a tracker mortgage or had one on its books over a period and somebody went to it for a mortgage but was not offered the tracker mortgage option, does that person have a case to bring under the Central Bank review? That is hugely important. If that is the position, which is how I would read this case against Permanent TSB, then the numbers will increase substantially.

We have been contacted by many customers who are blue in the face from contacting their banks to ask to be included in the redress scheme and the banks are still doing the bare minimum and not listening to their own customers. Will the Minister of State clarify what a client can expect if a bank refuses to put a client's file under review or to get his or her file in the first instance? Where would that person go and how can we help him or her? I highlight the work of my colleagues, Deputies Donnchadh Ó Laoghaire and Pearse Doherty, who recently presented the multi-party actions Bill to the Dáil. That Bill would allow class actions to be taken by people such as those who have suffered in the tracker mortgage scandal. This class action move is hugely important. Many people are financially constrained because of the tracker mortgage issue and other issues who cannot afford to take action themselves, so the class action provision is needed.

Has the Government made any moves to ensure that individual responsibility is taken for what was done? Has the Minister stated clearly to the heads of the banks that action will be taken against individuals found to be responsible? I note what the Minister of State said in regard to enforcement. Credit is due to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach for pushing for action in that regard. I am travelling to Iceland next week, where I hope to discuss the circumstances whereby dozens of bankers in that country were sent to prison for their wrongdoing within the banking system. Unfortunately, we all know Ireland does not do prosecution of white-collar crime. People can only wait to see whether enforcement will finally happen in this instance.

There is much the Government could have done already in order to encourage action by the banks. The Minister could, for example, have objected to the reappointment of the CEO of Bank of Ireland, in which the Government is a majority shareholder. He could have sacked the boards of Permanent TSB and Allied Irish Banks. I do sometimes empathise with the Government in all this, especially when Fianna Fáil makes lots of allegations and suggestions.

Sinn Féin would never make allegations or suggestions.

We all know, of course, that the crux of the problems in the banking system is the closeness that has existed between senior people in that party, including successive leaders, and senior bankers. It was a case of "You scratch my back and I will scratch yours". I am sorry to have to say this, particularly as I have great respect for Senator Horkan and the work he has done on the finance committee.

I was never in that club.

We have the photographs and everything else to prove it. The playing of golf together, the appointments to boards and all of those things helped to create a culture of absolute corruption within the banking system. Governments are there to protect people, not to protect bankers and the elite. That type of closeness must never again be allowed to develop between senior politicians and senior bankers.

Does nobody in Sinn Féin play golf?

I know this type of truth hurts. I am pleased to see Senator Kieran O'Donnell sticking up for his mates on this side of the House.

Senators are wasting time whenever they interrupt or respond to interruptions. I intend to be strict and invite the Minister of State to respond at the assigned time, at which point some Senators may be disappointed at not having had an opportunity to speak.

People were robbed of their entitlements in respect of their mortgages and that has caused great suffering. I commend, once again, the work of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on this issue and the efforts being made by the Central Bank to address it. The deadlines are being moved all the time but what will happen if the final deadline is not reached in terms of making the initial payments? I am not referring to the entirety of the redress owing but, rather, to the initial moneys that have been definitively quantified. Those amounts must be repaid as quickly possible to the customers in question. What action will the Minister for Finance take if that is not done?

I welcome the Minister of State to the House to discuss this issue. However, I am deeply disappointed that we are having this type of debate yet again. It is not the first time the Oireachtas has had to examine disgraceful and reckless behaviour on the part of banks in this country. It is difficult to believe that we are in the same position again and, in this instance, the scale and impact of the wrongdoing is absolutely shocking. As of September last, some 13,000 mortgage holders had been denied their right to a tracker rate or had been moved onto the wrong rate, which cost them a fortune. Many of these customers were unable to meet their repayments, with the most recent figures showing that 102 people lost their properties. In 23 of those cases, the person's home was involved. How many of those people are now homeless? How many woke up this morning in the cold and the lashing rain? It is contemptible that banks' pursuit of profit could place people in this situation.

It is important, when considering the hardships inflicted on these people, to bear in mind that we are not dealing with circumstances where individuals lost their jobs or sources of income during the recession, as happened to so many in the past decade. What happened in these cases was purely the fault of the banks. Moreover, these were not some random accidents or isolated incidents. This particular practice happened across several independent banks over a number of years and, as such, appears to have become a systematic problem. That is a serious indictment of the attitude taken by banks to customers and also of the culture and ethos within those institutions. One wonders whether the people involved have any heart at all, or any compassion or empathy. Their behaviour has been disgraceful.

My focus in respect of issues of this nature is always on the families and individuals affected. We should never lose sight of the pain, hardship and distress this has caused. The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach heard testimony from a man who, under intense pressure as a consequence of the actions of his bank, had a stroke at the age of 47. These types of stories should shame us. As legislators, we must consider what it feels like to lose one's home, the place where one spends cherished moments with family. To lose that home, not because one's income has dropped or a job has been lost but because one's bank illegally raised the repayment rate on one's mortgage such that it was impossible to cover the payments, amounts to a grave injustice. The human suffering, particularly the mental health impact, must not be forgotten. I commend the people who came forward to seek redress for this mistreatment. That took courage and persistence in light of how long this has been going on. They did not have the capacity for a class action suit but they pushed forward regardless. It can be difficult at the best of times to go toe to toe with a bank or financial institution in order to highlight an injustice and have it set to rights. The complexity of the issues in this instance makes it more difficult still. When one is inundated with legal letters, for example, it is incredibly hard to find the time and space needed to get out from under the pressure of the financial difficulties one is experiencing and make one's case.

A large number of the people affected have not received the moneys owing to them. I call on the Government and the banks involved to rectify this as a matter of urgency. For some people it could mean the difference between skipping a meal or not. That is the seriousness of what we are dealing with here. However, it is not enough simply to give the money back and say "Sorry". People have lost their homes and I am concerned that the redress schemes touted fall short of what is expected and what is being proposed by the Central Bank. We are all sick of situations like this whereby we are forced to debate the actions of banks in pursuit of profit and the ruin this has meant for ordinary people. We need to learn from this case and put robust controls in place to ensure it does not happen in future. That should be the key lesson from our last serious banking crisis and this latest scandal. We must deal with the way our banks are governed and the capacity of the Central Bank and the Government to regulate them. It is not good enough to keep saying that we must change the culture. As legislators, the onus is on us to act to make that happen. Given this latest scandal and those that have gone before it, I do not see how people can have any confidence in the State's ability to deal with reckless banking and financial institutions. People feel disempowered and, unless we act quickly, that will not change. I urge the Government to take every step needed to correct that situation.

I apologise to the Senators who did not get an opportunity to speak. The next speaker on the list was Senator Feighan, who left the Chamber, I understood, on the assumption he would not get a chance to contribute. I am merely the referee; I do not order the business. I call on the Minister of State to reply.

Senator Black noted that 23 people lost properties that were their primary dwellings. I have been talking to people about tracker mortgage issues since before I became a Minister of State. We have all dealt with people facing these types of difficulties. There is a huge difference between, on the one hand, somebody who was overcharged but who was capable of making the overcharged payment without it affecting him or her in a significant material way and, on the other hand, people who ended up losing their homes as a result of being overcharged. My view is that the people who were seriously injured by the actions of the banks should be compensated by a country mile more than those who were not severely impacted.

The Government does not regulate the banks; the Central Bank does so on behalf of the State. Several Senators asked whether the overcharging was systematic. We know that 10% of accounts were affected. If it was a systematic practice, one would expect the number of accounts affected to be much higher. I do not know how we got to the point that a nice, even 10% of customers were affected, but we are looking into that.

Senator Conway-Walsh raised a point that is very difficult to answer when she referred to the customers who went into contracts with their banks after the latter had failed to offer them a tracker rate on their mortgages. That is the nub of the matter under discussion. Having not been offered trackers, if they chose to enter contracts on a variable or fixed rate, should they then be entitled to compensation?

I do not know the answer to that.

The court ruled that they should be so entitled.

It is part of the Central Bank's examination, which covers all aspects of the matter. I think that will be decided by the courts. It is most likely to expand to the superior courts from the original O'Dwyer case. However, I do not know for certain. Natural justice is always an issue. If someone was happy to accept a variable rate at that stage, was told about a tracker and chose - with an informed mind - not to get one, should he or she be entitled to the compensation? I do not know. I think all those in this Chamber would have different opinions on that.

Iceland was used as an example. The population of Iceland is 300,000; the population of Wicklow and Wexford is equivalent. The population of Ireland is 4.7 million. Our population is multiple times the size of Iceland's, so comparing Iceland and Ireland in this regard is not really comparing like with like.

Class actions are an option for the Government. We have not reached any conclusions in that regard. As of the end of September, there were 13,000 cases. Representatives from five banks met the Minister for Finance and committed offers being made in respect of 12,000 cases. It is very important that those offers be made. If people choose not to accept offers, that is up to them. However, offers will be made and the Central Bank will have oversight of the process. We do not want a one-size-fits-all approach because we feel that some individuals might fall through the cracks. Some people may be much more impacted upon or injured than others. We do not want to see those round pegs being squeezed into square holes. We want the process to be fair and legitimate. First will come redress, which will involve customers getting their money back, and second will be compensation. We want this to be fair and reasonable and ensure that the injured people are fairly treated.

Regarding class actions and a dysfunctional market, I previously served as a Member of the Dáil between 2007 and 2011. In that period, we all said that there was not enough competition. We brought in competition and that really made a mess of things. Let us be honest about it. Older, established institutions such as Bank of Ireland, which previously had not lent money for mortgages easily, suddenly went into a space that they had never occupied before because they were chasing their competitors. National Irish Bank and Bank of Scotland, Ireland, came in and offered tracker mortgages at rates that were not sustainable. They have since exited the market. However, the other banks remain. The issue we have now is whether we have a dysfunctional market. We do not have a dysfunctional market; we have an expensive market because we do not have enough competition. The problem is that when competition comes in, goes after market share and undercuts existing financial institutions, there is a price war. Price wars never work out well. Someone gets the benefit of entering early, someone gets the market share up but, eventually, there must be a sustainable product, whether a mortgage or any version of any product on the shelf of any institution.

Is there a cartel when it comes to competition? That is a matter for the European Commissioner for Competition. She is pretty good at slapping us with fines, so perhaps she could look into that.

Matters relating to the ODCE, the Garda and the Central Bank are for those institutions; they do not concern the Department of Finance. The Central Bank is investigating and engaging in a deep dive into the financial institutions' activities. If any information that requires to be passed on to the ODCE or An Garda Síochána is identified, that will be a matter for the Central Bank. I support the Central Bank 100%. If wrongdoing is identified, we must ensure that the institutions of this State pursue it. God knows, if someone robbed a supermarket or a bank, he or she would be pursued, and rightly so. The same standard applies to any other wrongdoing, whether it involves white-collar crime or crime of any other type.

If I did not reply in respect of particular issues, I apologise.

Again, I apologise to Senators Murnane O'Connor, Mulherin and Feighan, who were not able to make contributions.