I call on the Cathaoirleach the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, Deputy McGuinness, to move the motion. He has 15 minutes.
Report of Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach: Motion
I move:
That Dáil Éireann shall take note of the Report of the Joint Committee on Finance, Public Expenditure, and Reform, and Taoiseach entitled "Report on Banking 2022", copies of which were laid before Dáil Éireann on 18th May, 2023.
I acknowledge the role of the secretariat in the preparation of this report, which I recommend to the House. I ask the Government not only to give it and its 20 recommendations serious consideration but also to act on some of the recommendations. This report was compiled over the course of 2022. All the committee members were very engaged in the process. We invited in representatives from the banks and Departments and various stakeholders, and we had many written submissions.
I want to point to the part of the report that refers to whistleblower Jonathan Sugarman, whose story has been well publicised and who worked for UniCredit under Banca d'Italia. He was a senior risk manager and came forward with a report to the Central Bank. He highlighted the errors in the bank and how it was trading recklessly. He has received no recognition for the role he played in exposing what was going on in his bank. In fact, because risk managers are few in number, he has found it extremely difficult to get employment since leaving his position, or since he did the right thing in reporting more than once to the Central Bank that there was a breach of legislation and of the regulatory framework pertaining to his bank. I would like to see the Taoiseach acknowledge Jonathan Sugarman. A public political acknowledgement is necessary. If we are to encourage those who work in banks to come forward and report wrongdoing, we must start at the beginning with Jonathan Sugarman and the other whistleblowers who made information available, some of whom have protected disclosure arrangements in place. I want to see that first and foremost. It would be an indication that the State is finally acknowledging a significant whistleblower in Jonathan Sugarman and the others who came forward with other pieces of information. It might give some hope to the other whistleblowers in various departments who have been blackguarded by the State, not been recognised and in fact ended up, like Jonathan, penalised, out of a job and unemployable. That is not what the State should be doing; it should be protecting those doing the right thing in accordance with legislation, exposing wrongdoing and speaking truth to power. That is what we want people to do.
I acknowledge the likes of David Hall and Padraic Kissane, who lobbied and informed many of the members of the committee and the general public regarding what was going on and also assisted customers of the banks who could not deal with the banks although they were wronged by them.
When the Governor of the Central Bank – not the current one – attended the first meeting I chaired, in the region of 3,500 tracker mortgages were in difficulty. The number is now over 50,000 and it is still not fixed. Banks have been fined. Bank of Ireland was fined €143 million and another institution was fined €186.4 million. AIB was fined €83 million and EBS was fined €13.5 million. Permanent TSB was fined €21 million. There was a previous fine for AIB of €125 million. Thirteen homes were lost in one bank, 15 in another and 12 in yet another. What kind of Central Bank or regulation do we have in place that would at times turn a blind eye to some of the cries for help from the general public? If it were not for the finance committee bringing in those affected by the tracker mortgage issue, putting a human face on the disgraceful behaviour of the banks, we would not be where we are today, would not have had the banks fined and would certainly not have a redress scheme in place, even though it is inadequate. I appeal to the Minister of State to tell the banks to finish off the job they set out to do with the tracker mortgages and pay those who need to be paid.
Some of the tracker mortgages, and indeed some other mortgages, have been sold to the vulture funds. Therefore, vulture funds are now operating in the country. They have a front-of-house service, yet it is impossible for normal clients to deal with them. We should remember these are customers whose loans were sold off by the banks to vultures when they were not able to pay interest at rates of 1%, 2% or 3%. Now the vulture funds are applying rates of anything from 7% to 9%, expecting the same people who were broke in the first place to pay an extraordinary amount. The vulture funds purchased the loans from other banks for little or nothing or at knock-down prices and are being allowed by the State to crease customers with increased interest rates, making enormous profits on the backs of unfortunates and paying little or no tax. Do we want the kind of society where big business can screw over the little guy, even though there is wrong being done to the latter? I would say that we do not and that this is not the way it should be. We should pass legislation or amend the Central Bank regulation to ensure the ultimate amount of protection is offered to the customer. If we do not, we will end up in the same position again, with big businesses and big banks making huge profits. The profits are obscene at the moment, yet the banks are still threatening their customers.
Pepper has roughly 80,000 residential mortgages. Its representatives refused to come before the finance committee. I am not singling them out because they have been co-operative in other ways. However, there is a list of them, including Mars Capital and Start. They should all be made to report on a regular basis to the finance committee. The people elected Members of this House to represent them. They have been appointed to do a job and yet the legislation is preventing them from doing that job by allowing them to be outside of the scope of the finance committee or this Parliament. However, they can go and visit the Department of Finance on a regular basis. They can apply high interest rates to people who are already in trouble, and they have access those at the highest levels of the Government. I just cannot accept that.
The culture board is doing a fine job. I recently attended a meeting chaired by an eminent judge. The board's work is having some impact. The culture I am talking about is on involving particular middle to senior managers and boards. They seem to have no regard for Irish society or for politicians and what we want to achieve in terms of fairness. On the other side, there may be some customers who just will not pay. For the ones who are making an effort, however, we in this House should at least try to protect them. We are constantly told that the protection will travel with the loan to the vulture funds. That is utter rubbish because in order to ensure that happens, it requires the person or family, who are under pressure anyway, to hire someone to fight for their rights, and they cannot afford it. So, what happens? The vulture funds walk all over them.
Ed Honohan has been a great advocate for a correction in the banking system. He has offered legislative information and advice. During the Covid pandemic, I remember sitting to authorise legislation that the courts be allowed to perform on Zoom. Buried somewhere in that legislation was the hearsay evidence passed by the Dáil down in the convention centre where we were sitting at the time. I did not vote for it, thank God; I would not do so. Now that is another tool being used by the banks against the people we represent.
EBS tied agents, after years of campaigning through the finance committee - many of them have died - were given their rightful compensation but AIB fought to the bitter end to avoid that. The Belfry investors, exposed by a whistleblower, also had to fight to the bitter end and some of them have not yet been paid. Some of them have not been recognised as a group that has to be paid. I would like to see them paid. I would like to see the banks owning up to any other issues that they have in the cupboard and commit to rectify the wrongs of the past. A discount formula is used regarding the fines that they pay. The Central Bank fines them fines and then adds a discount. Someone fined in the courts must pay up. As the Central Bank is the court for the banks, they should pay the full amount of money and no effort should be spared in the context of insisting that they come to terms with all of the issues that they have.
Switching has been mentioned. Those under most pressure are the ones within the whole vulture fund representation in terms of their mortgages. How can they switch? They have a bad credit rating. We are asking that they be switched to a standard mainstream bank outside the clutches of the vultures. How does that work? Are we going to correct the credit bureau ratings for all these people? Are we going to insist on the vultures doing something different to accommodate them or insist on those banks - Bank of Ireland, AIB and PTSB - do something to ensure that they take those debts back? I do not see any appetite on the part of the Government to take on the vulture funds or indeed the banks to insist that something like this happens. As long as that is the case, we will have an imbalance in our system. The vulture funds and the banks will continue to dictate what they want to do. The finance committee has 20 recommendations here, with a significant number of documents attached to prove the points that we were making and they should be taken note of.
Ulster Bank and KBC have left the country. They left behind them many cases that remain to be resolved. Bank of Scotland and NatWest are under scrutiny in the UK. We should be linking in with the UK authorities to ensure that any Irish customer who has been affected in any way at all is given fair play. That is what we should be doing because our banking inquiry, going way back then, as described by Jonathan Sugarman, was a waste of time and a whitewash. I believe that is the case because there was a certain way of conducting that banking inquiry that could have exposed everything as was done with the DIRT inquiry, but that was not followed. There was a certain parameter and shape put on that inquiry that did not do the job it was supposed to do.
This is a work in progress. We continue to meet the banks. We continue to deal with the issues that we are faced with arising from the banks. It is an unfinished piece of work that will take some time to bring to an end. I appeal to the Minister of State to bring the Government on board in what we are trying to do and to insist on fair play for the citizens we represent, who are being robbed of a quality of life that they should have.
I thank Deputy McGuinness and the members of the committee for the invitation to discuss the Report on Banking 2022, which was published ten months ago. I appreciate that it is a wide-ranging report, and I want to address all the points. I also want to address the specific issues that Deputy McGuinness raised. I will try to do both in my time.
The first ten recommendations in the report deal with the withdrawal of Ulster Bank and KBC from the Irish market. I ask to be allowed to address that because it is a substantial part of the report. Obviously, the withdrawal came as something of a surprise and changes the landscape of retail banking significantly. The retail bank population has dropped from five to three banks, leaving only domestic banks in each of which at the time the State had a shareholding. There are considerable concerns about the impact that would have on the mortgage market, personal and business finance, deposit investment and cash services. The State has had to react to that.
The big unknown related to current accounts because more than 1 million deposit and current accounts needed to be moved. That is of enormous practical significance to anybody who has to do it - to find a new account and to go through the practicalities of switching direct debits, etc., to be able to do that. That happens in an environment of traditionally very low levels of switching. Ordinarily, only 4% of accounts are switched each year. What happened created an enormous practical challenge, and everybody had to play their part. The Central Bank oversees withdrawals from a supervisory standpoint but many other stakeholders are involved.
I thank the members of the committee who have worked directly with departing and remaining banks in this process. Of course, the mass migration was an opportunity for some new players such as Revolut and for established players to play a more integral role in the market. As Minister of State with responsibility for credit unions, I was very pleased with the role that the credit union sector had to play as part of that switching process.
To date, 84 credit unions have received approval from the Central Bank of Ireland to provide current accounts and more than 75,000 credit union members now have current accounts.
The mass migration of consumer and business accounts is now nearly complete, with more than 99% of active accounts now being closed and 1.3 million new accounts having been set up in the remaining retail banks. It is fair to say that it was a stressful time for many people and switching all the payments, such as direct debits and recurring card payments, was highly inconvenient. To be honest, contacting banks for assistance was not always easy in that process. Despite the effort put in by customer-facing teams, it was a difficult process in my view and my constituents’ views. There are very significant lessons to be learned from that experience. The Central Bank will reflect on that carefully.
It is important to reflect on competition in the market and on the retail banking review in that regard. In that way, I again would like to mention the role of credit unions because in the overall consideration of the new banking environment and the retail banking review, it is clear that we need greater competition. We need a community bank that is focused in a not-for-profit way on serving the interests of its members. I wish to highlight how credit unions have stepped up to support their members and, additionally, have grown not just their current account offerings but their mortgage lending. At the end of June 2023, the total credit union mortgage books stood at €418 million. That was up by 39% over the last year and up 69% over the past two years. Deputies up and down the country will know the role credit unions play in their communities and I am keen to try to expand that.
The Irish League of Credit Unions has seen its combined mortgage book grow by 50%, with more than 1,100 new mortgages being issued so far this year. Commercial lending to our small and medium enterprises is now up to €161 million. I highlight this because these are not traditional areas in which credit unions have operated. It goes to show how they have adapted to try to serve the needs of their communities. Deputies will be aware that legislation has passed Committee Stage in this House to enable credit unions to form an even bigger part of retail banking in Ireland. I thank them for their support in relation to that. A practical example of that is through the mortgage credit union service organisations, CUSOs, which will provide the sort of collaboration that will deliver better for customers and members right across Ireland. It will significantly expand the role of credit unions in Ireland. That is a rebalancing effort, considering the difficulties that Deputy McGuinness highlighted in his report as a result of the changing banking landscape.
We can agree that it has changed considerably in a number of different ways. The way many people interact with their banks has changed. It does offer opportunities for customers, such as ease of access and increased access to different range of products and services. Customers have many different options and different providers for different products. It is also fair to say, and Deputies will know this, that some of the changes have had a highly negative impact on some customers. The closing of branches, the reduction of cash services or other in-branch services can affect consumers, especially those in smaller towns and rural areas. I am thinking of those in my own area and elderly people who are accustomed to a particular type of access to their banks. Many of those issues have been raised by Deputies before in the Dáil and I wish to reflect on how the Government is taking action to address some of those concerns. The retail banking review recommended that banks should submit robust board-approved assessments to the Central Bank where they are planning to significantly alter their services or close their branches. That should examine the impact on customers, the suitability of alternative service provision and plans for migrating customers to them. The minimum notice period was recommended to increase from one to four months for significant banking changes. In April of this year, the Central Bank wrote those “Dear CEO” letters to the remaining retail banks. Banks should aim to adhere to the new notice periods and that also will be part of the Central Bank review of the consumer protection code.
I again highlight some of the offerings by credit unions and where they stepped up. Ballyconnell Credit Union in County Cavan decided to offer current accounts after becoming the only financial institution left in the town. Their current account provision has been a game-changer in the local community. While that is success, I am highlighting how many towns in Ireland have suffered as a consequence of the withdrawal of retail banks and how there are large tracts of Ireland in which there is no retail bank offering. We have to support the credit union movement to fill that gap. For example, in Ballyconnell, they had a modest expectation of approximately 300 accounts per year but it has worked out much better than anticipated, with 750 current accounts opening since the launch in March, including 500 new members. It should be the case that no matter where you live in the country, you should be able to access all the financial services you require, whether that is in person, in a reasonable way, or online. Credit unions offer that. You also should be able to access cash.
The Deputies are aware of the retail banking review’s recommendation in relation to access to cash and this is referenced in the report. The Department of Finance is preparing legislation and the heads of the Bill will be available before the end of this year. It will require ATM operators to be authorised and supervised by the Central Bank. We look forward to engaging with the Oireachtas on the proposed Bill early in the new year because it is quite obvious, and Deputies have raised this a number of different times, how important it is to be able to access cash. Again, I can give the example of how wonderfully the credit unions have done that, and in Roscommon in particular.
I want to address the points raised by Deputy McGuinness also. I note the Deputy has raised a number of individual cases in relation to whistleblowers and I respect him for doing so in this forum. I recognise that. He will appreciate that I, as Minister of State, cannot comment on individual cases but I am aware that the Central Bank has met individuals. It has a strong focus on the role of whistleblowers. While it of course should not be the case that somebody is prejudiced because they have engaged in whistleblowing, I will not comment on individuals as I wish to be careful.
I will reflect that the role of the Oireachtas committee is an extremely important one. We should be able to go through all the different issues that are facing customers in the area of financial services. I will also offer a note of caution. As a former member of the Committee of Public Accounts, we must be very careful about the role of Oireachtas committees, their scope and how that is managed. The way in which the committee has provided this report is an excellent example of being able to highlight these different issues.
I understand the frustration that Deputies may have in their representations of constituents who are dealing with some of the non-bank lenders or the newer lenders. I am a constituency TD. I understand exactly the sort of dynamic that Deputies occasionally raise. I have spoken to the Department about a way through which we can facilitate hearing their voices in a concrete way within the Department, as well as with other stakeholders, in order that every dialogue in this regard is balanced and understanding of the pressures and frustration that our constituents face from time to time. I want to address those points for the Deputy before sitting down.
I might address some of the other points. In relation to the report, I note it has particular concerns. This was from ten months ago but I am sure the concerns persist in relation to interest rates, which have increased in the period since the publication of the report. At this moment, it looks as though they have settled or paused. We hope this is to be more than temporary, but I say this on reflection. It is an extremely important challenge from cost-of-living and inflationary perspectives.
Monetary policy is set and implemented by the ECB. The setting of retail interest rates in the economy is a commercial matter for individual firms. Of course, neither the Minister for Finance nor I have any function in the setting of interest rates. Yet, it is helpful to set out some of the rates. As of June 2023, banks average weighted mortgage interest rates had increased from 2.58% in June 2022 to 3.42%. Banks have seen increases in all interest rate types of mortgage lending. New non-bank non-lenders have seen the largest increase, moving from an average interest rate of 2.47% in June 2022 to 4.73% in June 2023. I am told that is driven primarily by a larger tracker book. Non-bank lenders have seen the smallest increase year on year, mainly due to a reduction in new lending for 2023, having predominantly fixed product mortgages in their portfolio. The Government is very acutely aware of the difficulties that increased interest rates are causing for some mortgage borrowers. We are revising the bank levy to try to provide a more proportionate contribution to our public finances to be able to provide support, including mortgage interest relief in a targeted way.
It is important to say what we need to do to support the sort of borrowers the Deputy is correctly highlighting, namely, those who are in particular difficulty. We have all met them as constituency TDs. First, the Central Bank’s regulatory framework is focused on protecting customers. It compels all regulated firms to have high standards of transparency and fairness in their dealings with borrowers. The Minister met the CEOs of banks and other mortgage entities at the end of August to reiterate his concerns about the impact of rising interest rates on borrowers.
He clearly set out the expectation that all firms should support their customers at this time. The industry responded to the Minister on 6 September and it announced additional measures to support customers who may be experiencing difficulties. The industry has launched the Dealing With Debt campaign. Government supports are available through the insolvency service and the Money Advice and Budgeting Service, MABS, which are important resources to help with personal debt difficulties. Struggling borrowers should continue to engage with the different organisations. I appreciate the imbalance there is in the nature of that engagement and how difficult and stressful it can be for a borrower to be in that situation. The process can be extremely difficult and stressful and I acknowledge that, having tried to support people with such representations in the past.
Another new initiative arising from that meeting with the Minister is that MABS is collaborating with all of the mortgage servicing firms. It has developed and expanded a streamlined customer engagement framework, which I hope will work, and it meets regularly to discuss individual cases. That is a necessary improvement to the engagement between these firms and borrowers facing difficulty. The final initiative that the industry has agreed is a new set of common eligibility criteria, which would make it easier for customers of credit servicing firms to switch mortgages, as the Deputy has highlighted. They say that would give important clarity to borrowers who would like to switch mortgages from non-banks back to the retail banks. I have spoken to the credit unions and the representative organisations that are keen to engage in this also. As the Deputy said, however, it can be extremely difficult. My colleague, Deputy Griffin, has highlighted a number of individual cases in recent days. Deputies from every side of this House could highlight difficulties. Whatever about resolution, there are difficulties with the nature of engagement. It is important that the balance is flatter between borrower and lender and that engagement is supported and rewarded
Let me see what else I can cover for the Deputy on the different recommendations. It is important, today of all days, to highlight the impact of digitalisation and fraud. Fraud is on the rise and fraudsters are taking advantage of the shift to digital banking. Every one of us has received emails and text messages purporting to be from banks or delivery companies, or in my case from eFlow for the M50 toll. There is a real risk, particularly now. I see this anecdotally but coming up to what is known as Black Friday, there is a risk of small transactions being sent to people on their phones and them having to click on the link for €3.99 or something else. There appears to be increased fraudulent activity this weekend as the shopping frenzy of Black Friday goes on. We need to be aware and highlight to people across Ireland the risks, coming up to Christmas, of increased fraudulent activity as they perhaps buy more online, and it is difficult to keep track of what delivery may or may not happen. We should be especially vigilant of fraud at this time of year. Consumers can feel under pressure to either borrow or engage in buy-now and pay-later arrangements. We should seriously consider the types of credit for people and help them understand what they may be getting into.
I thank the Cathaoirleach of the finance committee, Deputy McGuinness, for his work and for the work of the committee on the report on banking. The report predates my time on the committee but I want to indicate my support for the general assessment and the recommendations in the report. The report is rightly critical of the banking sector for this historic damage to the economy and for its ongoing treatment of customers.
A lot has happened since the hearings were held and the report was produced. The report warned that the European Central Bank interest rate would continue to rise in response to inflation, something that was widely predicted. It was predicted by everyone except this Government. The Government sold huge amounts of shares in the banks that the State held shares in since the bailout. It decided to sell right before the banks would benefit hugely from the interest rate increases. In autumn of last year the State made a number of large sales of shares in banks. In September 2022 the State sold shares in Bank of Ireland to the value of €841 million, for an average of €6.17 per share. The Bank of Ireland share prices have since risen to almost €9 today. Similarly, a large sale of AIB State shares happened in November last year and we have since seen a substantial increase in share prices there as well.
Share prices are driven by rising demand. When many investors were looking to get into banking, the Irish Government was going in the opposite direction. With inflation running at above 8% at the time, and everyone expecting ECB interest rates to rise, it is not evident that at that stage the banking profitability was likely to increase. If the State still held those shares from those two sales last autumn, they would be worth more than 50% more today. The State missed out on hundreds of millions of euro because it did not have the foresight to see this, as a result of a Fine Gael belief that the State should take a more hands-off approach to our banks. With everyone expecting interest rates to rise, the report rightly expresses concern that if such increases are passed on to customers by increasing borrowing rates, it will bring further pressure to individuals and businesses during the ongoing cost-of-living crisis.
Many households have been pushed to the pins of their collars by the interest rate rises on mortgages. We have seen the Government U-turn on the idea of mortgage interest relief and that is to be welcomed. It will provide a limited degree of breathing space to many households. However, as is often the case when the Government adopts Sinn Féin policies, there is an issue with implementation. I really find it concerning that there are so many - about 127,000 mortgage holders - who have mortgages of less than €80,000. There was no reason whatsoever to have an arbitrary figure or cut-off like that. Many of the people I know, who could only afford smaller mortgages in the first instance, are now caught in that trap where they have to find hundreds of euro extra every month to be able to meet the mortgage payments. I am talking about lone parents and people who are struggling with the cost-of-living crisis as it is. It hits those who are poorest.
We have been left with a lack of competition in the banking market. In the absence of competition we need tight regulation. We need a Government that is willing to hold banks to account. We had the shocking situation of a Minister telling Irish citizens to move their money into accounts in other EU countries to get better interest rates. Section 6 of the report addresses the bank remuneration policy, noting that public trust in banking remains to be restored, and recommends that the current restrictions on banking remuneration remain in place.
This report, produced by a committee made up of different parties, and even a majority of Government TDs, have called for a cap on banker's pay, but bonuses remain in place. Despite that, at the end of 2022 the Government moved to relax salary caps and increase bonus payments for banking executives. This was at a time when banks were making record profits, not from some innovation or great management but from the jacking-up of interest rates. This Government decided to ignore the finance and public expenditure committee and reward bankers for bad behaviour. They squeezed mortgage holders and did not pass on higher interest rates to savers. For that the Government thought they should be rewarded.
I know Deputy McGuinness has talked about the vulture funds and the fact that they will not come before the finance committee. That is disgraceful. We have had many witnesses before the committee but not the vulture funds, which are charging up to 10% extra for mortgages that were sold off, many of which should never have been sold off in the first place because they did not even fit the criteria of those we said would be sold on. Now they will not come before the committee. What are they hiding from? People do not even know where the deeds of their houses are, who they are held with or who the end person on their mortgages is. It is a disgraceful situation. The reason they do not do that is they have the red carpet rolled out for them in other areas of Government. They do not need to come before the committee to be held accountable and that has to change. The first function of Government is to protect its citizens. How can we say that we are protecting the citizens of this country when we have thousands of mortgage holders who are struggling to pay their mortgages and when those who hold their mortgages will not even come before an Oireachtas committee?
When we talk about the vulnerability of traditional banking services, it is only a few hours ago since I spoke to a woman who I thought put it very well. She described how she was in the bank the other day. The person before her in the queue was an elderly man who was trying to find out about his own money and financial situation within the bank. I am sure that money was very hard earned. He could not get to speak to a human being. He kept being pushed towards the machine. Now, I do not blame the people because we have fantastic people working on the ground within these banks. However, they are instructed to point people towards the machines so that the banks can then appear before us in the finance committee and say that people's behaviours have changed. I welcome the digitisation of banking, but we are leaving people behind. We are socially excluding people who are just trying to get somebody and speak to a human being. That woman described to me the fear on that man's face and the relief when she stood up for him and said it was not right, that the man wanted to speak to somebody. In in the end, they got somebody to speak to him, but this is happening all over the country on the pretence that behaviours have changed. Behaviours have been forced to change, but people who do not have broadband and who are excluded because of digital literacy are vulnerable in all kinds of ways. They are not able to access their own money and they are also subject to other people taking control of their finances. It is absolutely not right in that situation, never mind the number of branches that have been closed as it is leaving so many towns without banks.
Even here in the Oireachtas, we do not have a cash point. The cash point was taken out. There are many things I might disagree with Deputy Durkan about, but he keeps raising this in the finance committee and he is absolutely right. For any of us who want to take out some money during the day, we have to go out and try to find a machine that is working and then come back again. We all know what is happening on the streets and the vulnerabilities there if people have to go out in the dark night seeking to access their own money.
In the meantime, the banks are projected to make over €5 billion profit this year. My question to the banks is how much is enough. Is it €5.5 billion, €6 billion, €10 billion or €20 billion? How much more do they need? There is an absolute disregard for people who bailed out these banks and we get the answer that money was paid back. I refer to the suffering of the people and services that were withdrawn, many of them in very vulnerable communities, to prop up the banks and nationalise the debt of the banks at the time. We are suffering the consequences of that now in our towns and on our streets right across this country. Talk about selective amnesia. They forget how they were so dependent on the Irish people and how people were good enough to tolerate, or had to tolerate, what they presented to them in that situation.
I agree with the Minister of State about the credit unions. Absolutely, the credit unions need to be supported. I am glad to see changes there because I absolutely have faith and confidence in the services the credit unions are delivering. Many of the people who are involved in credit unions across this country are volunteers. I do not know where many of us would be if it were not for credit unions.
As no other Members are indicating, the Minister of State has ten minutes to close the debate followed by the proposer for ten minutes.
I would like to address what Deputy Conway-Walsh said with regard to the banks and the Government strategy to divest from banks. The Government does not have a view that it should remain an owner of the bank. The Government also had the view that it should move back to private ownership as part of the broader economic strategy of showing that the State does not engage and does not get involved in the decision-making or does not get involved in an overreaching sort of way in a general sense in private companies. I know that Sinn Féin indicated in legislation that it would do this in respect of insurance companies. I wonder if Sinn Féin would take that view when its representatives go travelling across the US to tell people that nothing will be different and that companies should expect the exact same thing that it said that it has put in legislation-----
It is the timing.
I am sorry; I have debated it in the House, Deputy Conway-Walsh.
Yes, but it is the timing of the selling of the shares.
Let the Minister of State speak.
Excuse me; I am speaking. Sinn Féin would, in fact, interfere in the decision-making of corporates, as evidenced by its legislation on insurance. Sinn Féin would also maintain a stake in the banks on the off chance that share prices would rise. Of course, it is easy to come into the Chamber and say this and that happened. Share prices are volatile, however. Had the Government take a different decision and share prices had gone down, Sinn Féin would have said the Minister should have taken the opportunity in 2018 to sell off some of those shares. I appreciate that it is so easy to sit there-----
It is not easy at all. It is complicated.
-----and criticise one way or the other. The State, as the Deputy knows, has had a long-term strategy to divest precisely for that broader reason of not being involved and to have a hands-off approach from the management. However, we have actually had very good success in reducing the shareholding and making sure we have tried to recover as much for the taxpayer as possible. The Deputy will be aware that on the Bank of Ireland piece, we actually took in €2 billion more in its management. To date, €23 billion out of a total of €29 billion that was originally invested has been recovered. Our current investments are valued at approximately €5 billion, leaving a gap of just €1.3 billion. Between the dividends we have received and the management and timing for the divestment, I believe that based on that trajectory and on that management we will over time recover that money.
While the Deputy is sitting there - as I said, it is easy to criticise from the side - she might do two things. First, she might reflect on the success we have had in terms of the management of the divestment. Second, I hope she will confirm that a Sinn Féin Minister for Finance would not get involved in the management of different companies, like she suggested, with regard to insurance. I am happy to stand and criticise the banks where appropriate, but the Government took a stake in the banks, which was not a decision any government would like to take at that time. However, it has managed its way out in a very careful way that will and has recovered money for the taxpayer in an appropriate way and will continue to do so.
I thank Deputies for the engagement today and for the report. It is extremely important. I wish to reassure colleagues that Department of Finance colleagues will continue to work alongside the retail banking sector and, crucially, colleagues in the Central Bank of Ireland and other Government Departments to make sure we are delivering a retail banking system that can support customers, SMEs and the economy and provide retail banking products and services efficiently and competitively for consumers.
The 2022 banking review recommendations I highlighted in my opening contribution are targeted to achieve just that and deliver the best outcome for our citizens and economy. Overwhelmingly, more than anything, the question of fairness raised by Deputy McGuinness and the balance in terms of representation for borrowers who are engaging and who are having difficulties and want to find solutions and structured ways out of the difficulties they are in is important. They must be respected and supported. Certainly, from the Government side, we are trying to do everything we can in that regard. I hope we will see further progress from the engagement by the Minister, Deputy McGrath, over the next period.
This is an important period in the banking landscape. We are a small economy. We need access to competitive banking services for the people of Ireland. I thank Deputy Conway-Walsh for acknowledging that the credit union has a greatly expanded role to play, but I am not sure that it will be enough. It is important to acknowledge that we see the beginning of further movement into the mortgage market. Forgive me that I do not have the name to hand at this moment.
Did an Cathaoirleach Gníomhach ring the bell by accident?
It was an accident. The Minister of State still has five minutes. I apologise.
I cannot find the piece that I was going to say so perhaps I had best sit down.
I apologise to the Minister of State for that. I am sure she has no objections if Deputy McGuinness takes additional time.
It has been a worthwhile discussion. I think an Cathaoirleach Gníomhach deliberately knocked the gong there to knock the Minister of State off her last few minutes.
I remember the late Brian Lenihan in this debate and "Hell at the Gates" and all he did in terms of everything that happened at that time. History will be very kind to Brian Lenihan in the job he did at that time. He laid the foundation for much that happened afterwards in terms of Government policy and other policies that were there.
I want to pick up on a few things the Minister of State said. First, the Centra Bank of Ireland is conflicted, in a way, because it takes on the role of consumer protection. I do not know how we can have a Central Bank protecting consumers as well.
I, for one, would like to see that role taken from them. I would like to see an independent entity taking on the protection of consumers.
I agree with what the Minister of State said about the credit unions. I have always been an advocate for them. They are fantastic organisations. I am a member so I should declare an interest. They have been good to local communities and to people in difficulty and have helped them to work it out. Some €1 billion was set aside for credit unions in case they got into difficulty but they did not use it. They have been good in the management of their own affairs and that should be recognised because it is not recognised enough. The Minister of State recognised the work they do, and it is significant. They have an even greater role to play in the economy if we can bring forward the legislation and provide the break that is necessary to ensure that the Central Bank does not once again fit the same jacket onto credit unions as it does for all the mainstream banks. They are, after all, credit unions, driven by the people who created them in the first place. That work that needs to be completed sooner rather than later. We hear about the billions of euro that have built up in credit unions and would be made available if only they were taken out of the legislative straitjacket of regulation by the Central Bank. I would certainly like that to happen. Great credit is due to them.
I wonder why we cannot access the European banks. We are a member of the European Union. There are banks abroad willing to service from their headquarters and provide loans and mortgages. There are examples, including the Kiwibank and Sparkasse, and we could encourage credit unions to go down that route. Sparkasse, through the committee, expressed great interest in the Irish economy and in its model becoming part of the banking structure. We have never had a real, open discussion about the banking landscape of the future. What will it look like? What does the customer want? Rather than asking what the bank wants, what does the customer want? We should have that discussion. We should invite in representatives for a wide-ranging discussion about the changes that are necessary in those banks. Before I leave the topic of the EU banking system, and the Minister of State might explain or send a note on why we are not part of one European service for banking.
She mentioned rural banking. There are two different standards. It is okay to be in Dublin city and near the main streets because it means we can go to our banks. That is fine. With regard to rural Ireland, the committee, to its great credit, had to stop AIB closing ATMs and denying people access to cash. Does that not tell us something as we debate what the banking sector should do for its customers? No one has to tell me what I should do for my customers and business because my customer is king. If a constituent comes to the Minister of State for something, that constituent is king. Apparently, we have to have all sorts of regulation for banks to acknowledge the fundamental relationship of any business, which is with its customer. Here we are telling the banks what they should do. That is how bad they are. They continue to be that bad. They are driven by their boards to make greater profits and that is what they are doing. Banks claim they will care for and look after their customers, and encourage their customers to come in. They should be told to tell the truth. They do not care a damn about much of the stuff that goes on once they are making an enormous profit. They have no responsibility of care. We have seen that in all of the issues raised in our banking report. When banks claim, "We will care for you", it should be followed by an explanation as to how far that care will go. I have not seen much care, humanity or compassion in the senior banking sector.
That is also why we are having a difficulty with the vulture funds. They are at a distance, they are without compassion, they are driven by their boards and they show little or no humanity in dealing with customers who are in real difficulty. It is from there I get the anger about this issue. I listen to it. I put myself down as a third party for many customers. In a recent case, neither I, as a third party, or the customer, was notified when the loan was sold by a bank to Pepper. They are not even acknowledging some of the basic stuff they should be. They are pumping out letters to threaten people and doing all that sort of stuff but there is no one-to-one exchange between a vulture fund and a customer. The customer in question may not be literate at all in banking language and processes and so on. That is a serious problem.
Rural Ireland faces the same problem with standard banking. An awful lot of elderly people in our rural communities are used to dealing with cheques and going into banks and meeting somebody to get over any issue they might have. Now when they ring, they are asked to press a button for this and by the time they are asked to push a button for the 12th time, they have thrown down the phone. There are also people who do not use email. We have to be careful to ensure the banking landscape of the future does not disenfranchise people from accessing a business and getting their own business done.
I spoke to a lady the other day who was defrauded of €3,500. Dealing with the bank to get the issue resolved more or less amounted to the bank saying that she made the mistake. It told her to forget her explanations and if she did not like what it was saying, go to the Financial Services and Pensions Ombudsman. That is not customer service. Somebody should pick up the phone, call the person and have a conversation.
When I walk in off the street and into a branch of AIB, the staff nearly run away. People are not supposed to go into the branch; actually, they can go into any branch to question something. We need to do something about that.
Cybersecurity is another issue for the banks. I do not know how well up they are on the issue. I presume that out of their massive profits, which are obscene, they are doing something to invest in cybersecurity and protect the entire financial sector.
We need to be careful about digital currencies. The committee had a session on the topic. It was enlightening, to say the least, as to what is going on there.
The Minister of State called out some mortgages rates. I know of a case where a bank sold a loan. The person in question was paying an interest rate of 3.5%. The loan was sold to a vulture fund as part of an overall package and that person is now paying a rate of 9%. If that person could not pay an interest rate of 3.5%, how in the name of God will he or she be able to pay an increased rate of 9%? These are people who have loans and want to pay them back. They are paying money back to a vulture fund that bought the loan in the first place for little or nothing. It is charging rates of up to 9% and paying no taxes. We think that is okay. I do not think that is okay; it is daft. All of this was within the scope of the Oireachtas committee and so was Jonathan Sugarman. We have a paragraph on whistleblowers. I reiterate that the Taoiseach should be big and brave. He acknowledged the role of Maurice McCabe and he should also acknowledge whistleblowers from the banks because it would be a good thing for whistleblowers generally.
Someone had better regulate receivers. It is the Wild West out there when we get into receiver territory. They are being used to clean up all sorts of things, and not in a very nice way.
I will finally consider us in this House. We are politically exposed persons under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. I do not launder money. I am not a criminal. How dare the House and the Government categorise us all under that legislation?
Of course, it comes from the European Union and we should challenge them and the European Central Bank. I thank the Minister of State for her answers. I commend her on the work she is doing. I would like to see more done on all the issues I have raised.
Question put and agreed to.