The Central Bank is working with An Garda and other State agencies in relation to the tracker mortgage scandal, although it stopped short of saying a criminal investigation was under way.
The bank's director general for financial conduct Derville Rowland told the Oireachtas Finance Committee on Thursday the matter had been "discussed" with gardaí but said a formal investigation had yet to be launched.
Ms Rowland said she “couldn’t say” if criminal proceedings would come in the wake of its investigation into 11 of the 15 mortgage lenders who were operating in the State between five and 15 years ago who wrongly took people off tracker mortgages, but confirmed the regulator had met with gardaí on two separate occasions to discuss the issue.
She also said the Central Bank had met with the Competition and Consumer Protection Commission over the matter.
In his prepared submission to the committee, Central Bank governor Philip Lane described the examination as "the largest, most complex and significant conduct review that we have undertaken to date in the context of our consumer protection mandate".
While it remains unclear how many people have been caught up in the scandal, Mr Lane did indicate that the Central Bank expected the number to rise above 20,000.
He repeated the regulator’s concerns that two lenders “may have failed to identify populations of impacted customers or failed to recognise that certain groups of their customers have been affected by their failures”.
He said the Central Bank was “of the view that some of these customers have in fact been affected and, accordingly, are entitled to redress and compensation. We have challenged the two lenders on these issues and they will report back to us by end-October.”
While he declined to identify the two lenders in question, The Irish Times revealed this morning they are the Bank of Ireland and KBC. Neither bank would comment when contacted by this newspaper.
Mr Lane accused some of the State’s lenders of not moving to deal with the tracker mortgage scandal fast enough and he said that had they “offered better initial proposals in respect of redress and compensation, the examination would be at a more advanced stage”.
He said it was “clear that all lenders did not sufficiently recognise or address the scale of those unacceptable failings until Central Bank intervention.
“We have had to repeatedly challenge certain lenders and push to the limits of our powers in order to drive them to identify and remedy affected customers in an appropriate manner. This is a principal reason why the examination has required significant time to progress.”
Mr Lane said he recognised “the hurt and damage the actions of lenders have caused for many borrowers” and he said the bank was “pushing the limits of our powers to ensure affected customers are remedied appropriately”.
He said if Central Bank people were “wrongly excluded by lenders” from any redress and compensation schemes, it would force the lenders “to inform these customers of their decision and customers’ recourse options, using statutory powers as appropriate”.
He highlighted where certain lenders fell “materially short of the Central Bank’s expectations” by “failing to offer compensation for certain impacted cohorts of customers” or making “unacceptably low” offers of compensation in other cases.
He also said some banks had offered “unacceptably low payments for independent advice” and failed “to acknowledge certain types of detriment sustained by customers, for compensation purposes, including customers that switched lenders as a result of being on the incorrect interest rate.”
Mr Lane said that as “a result of our repeated challenges, lenders have significantly improved their redress and compensation proposals and their appeals processes.”
He said the Central Bank expected all relevant lenders “to have commenced redress and compensation by the end of 2017.”
