As the Deputy will be aware, the industry wide Tracker Mortgage Examination review is the largest most complex and most significant supervisory review in the history of the Central Bank of Ireland in respect to its consumer protection mandate. It has revealed the unacceptable damage that misconduct can cause to consumers up to and including the loss of their homes and properties in some cases. To this end there has been €665 million of redress and compensation issued to customers at end February 2019.
In order to deter financial misconduct and promote compliance and high standards in financial services, the regulator’s overall strategy has been to take firm enforcement action. The record fine issued to PTSB recently illustrates this.
The Central Bank of Ireland has markedly changed its approach to banking supervision since the crisis. This new approach can be seen through, for example, the Central Bank Reform Act 2010, the Central Bank (Supervision and Enforcement) Act 2013 and the European Single Supervisory Mechanism. To further support the work and power of the regulator, I am bringing forward the Central Bank (amendment) Bill which will introduce an advanced Senior Executive Accountability Regime (SEAR) which will, in tandem with new enhancements to the fitness and probity regime, help prevent something like the mortgage tracker issue happening again.
I would remind the Deputy that as Minister for Finance there are strict rules around how I can intervene even in banks in which the State has a shareholding. The day to day operations of the banks are the sole responsibility of the boards and management teams and each bank must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.
However as indicated this Government has firmly supported the work of the Central Bank of Ireland. This group of customers (often referred to as the ‘prevailing rate group’) has, directly as a result of the Central Bank’s intervention, been included in the Tracker Mortgage Examination and has the benefit of the option to appeal or utilise any other options available to them (such as an appeal to the FSPO or independent legal action). Speaking to the Joint Committee on Finance, Public Expenditure and Reform and the Taoiseach on 26 March, Director General, Financial Conduct of the Central Bank, Derville Rowland confirmed that the Central Bank took the 'strongest reasonable approach' to the issue. It did not just look at the contract it also looked at the transparency requirements, the factors which pertained at the time the customers entered into the contract but could not challenge the interpretation of AIB further.