Statement on the Tracker Mortgage Examination

25th October, 2017

“Today all five banks have made statements unreservedly apologising to their customers who have been adversely and shamefully impacted by the tracker rate scandal.


Let me be very clear – the Government believes that the behaviour of the banking sector in relation to tracker mortgages was disgraceful.  This is a scandal. It should never have happened and the Government is determined to ensure that it should be resolved.


The Irish people made extraordinary sacrifices to support the banks at the height of the financial crisis. Having done so, it is right that we demand, on behalf of the people, that the banking sector now, more than ever, operates in the best interests of its customers.  The legalistic approach taken by some banks to avoid doing the right thing is simply unacceptable. Ultimately such behaviour is not in the interests of customers or shareholders.


There has been a varying response from the banks and as a result, banks that did actually respond in a more appropriate and customer centric manner will not receive any credit for doing so.  It is now time that all banks seek to regain the trust of the Irish people by actions, not words.


Scope of the Investigation


The Central Bank, as the regulator with the appropriate powers, has been conducting an industry-wide Examination of tracker mortgage-related issues. Through the Examination, the Central Bank has publicly and unequivocally committed to ensure that all affected customers are identified and to use the full range of its regulatory powers to ensure they receive redress and compensation. Several enforcement actions are already underway. 


As these investigations by the Central Bank are statutorily mandated and can lead to very significant sanctions. Therefore, as Minister for Finance, I must be cautious not to jeopardise any potential enforcement actions or prosecutions.


The Government is determined that the banks resolve this matter as quickly as possible so over the past three days I have met with each of the Chief Executives of the five banks.  At each of these meetings, I made my views clear.


These discussions focussed on the scope of the tracker investigation, the timeline for a resolution, other follow-up actions and a review about the culture in Irish banking that allowed this to happen in the first place.


Based on its ongoing investigation into the tracker mortgage issue, the Central Bank is of the view that some bank behaviour up to now has been unacceptable, legalistic and not customer centred.  The Central Bank is also concerned that two banks had failed to fully identify customers impacted.


Following my meetings this week, all the banks have committed to working with the Central Bank to fully meet its requirements.  This will result in further affected customers being identified very shortly. 


I expect this aspect of the investigation to be finalised so as to minimise the uncertainty for such customers, and for redress and compensation for those further customers to swiftly follow. 


Timeline for Resolution


The top priority in the resolution process is that all affected customers are identified and the wrong is put right through redress and compensation. In this regard, I note the commitments by the banks to meet the demands of the Government and requirements of the Central Bank.


During the course of my meetings, the banks have confirmed to me that, the majority of the affected customers included in the group of already-processed cases will receive redress and compensation payments before the end of the year.


Consistent with the Examination, the Central Bank will set deadlines for the identification of further affected customers and deadlines for the payment of redress and compensation for these customers.


The Central Bank is committed to using all its regulatory powers to ensure banks provide redress and compensation to all affected customers without requiring customers to take further action.  The enforcement investigations underway must hold lenders to account for breaches of their regulatory obligations, where identified.


All redress and compensation will be in line with the ‘Principles for Redress’ set by the Central Bank. In that context the five banks have made the following commitments in terms of resolving the issue:

  • AIB –
    • 4,152 customers identified as being impacted at 30th September.
    • Almost 3,500 or 84% have already been redressed and compensated.
    • Redress and compensation for remaining customers by the end of the year.


  • Bank of Ireland –
    • 4,300 customers identified to date as being impacted.
    • Compensation process to commence from 10th November.
    • All of these customers fully redressed and compensated by the year end.


  • KBC –
    • 490 impacted customers identified to date as part of the current examination.
    • The vast majority of any remaining impacted customers to be identified by year end.
    • Complete payment for the majority of customers by the year end.
    • Payment with respect to more complex cases continuing into 2018.   


  • PTSB –
    • 1,971 customers identified as being impacted at this point.
    • 1,608 (82%) have already been contacted with offers of redress and compensation
    • The remaining 363 customers will receive similar offers by the end of the year.



  • Ulster Bank –
    • 3,500 customers currently identified as having been impacted.
    • Redress and compensation to be made to 1,000 customers by the year end.
    • Redress and compensation to a further 1,500 by end March 20018.
    • The remaining customers being addressed by end June 2018.  


All proposals and commitments made by the banks today are subject to challenge and further assurance work by the Central Bank.

Follow-up Actions


I intend that a range of follow-up actions will be undertaken to ensure that the banks live up to their obligations:


  • The banks must fully engage with and provide all the information required by, and within the timelines set by, the Central Bank


  • I have asked the Governor to provide me with a progress report by mid-December on whether each of the banks have made acceptable and sufficient progress in line with the commitments they are announcing today.


  • By mid-December the Central Bank will have received the additional further information from the banks and conveyed its decision on disputed groups of customers to the banks.


  • If satisfactory progress is being made, I have asked for a further report to be provided to me by end March.


If the Central Bank deems that the progress made on this issue has not been sufficient or acceptable, there are a range of possible policy measures available to me, including:


  • Introducing new legislative requirements for stricter reporting for all retail banks.


  • Amending tax law in a targeted way.


  • Targeted activist actions as a shareholder in three of the banks consistent with the protection of the taxpayers’ investment over the medium term.

Banking Culture


It is clear to me, from the meetings over the last number of days, that significant cultural issues and challenges in some of the retail banks still exist.


Customer interests have not been sufficiently protected or prioritised. This is unacceptable.  


Accordingly, I have mandated the Central Bank under section 6A of the Central Bank Act to prepare a report for me on the current cultures and behaviours and the associated risks in the retail banks today and the actions that may be taken to ensure that banks prioritise customer interests in the future. 


On foot of this report, the Government will determine whether any additional legislative and regulatory changes are needed that would enhance accountability in the banks for ensuring customer interests are prioritised.”