There could be at least another 5,000 customers caught up in the tracker mortgage controversy, according to the financial adviser who helped to expose the banking scandal.
Dublin-based adviser Padraic Kissane told the Oireachtas Finance Committee that there may still be thousands of customers who have not been returned to cheap mortgage interest rates that tracked the European Central Bank base rate, despite public statements from the banks that they were addressing the issue.
Mr Kissane said there were “large cohorts” of customers affected in each bank “that are not as yet addressed” and who should have been moved or entitled to the lower tracker rate.
Costs
He estimated that there may be at least another 5,000 cases beyond the 33,700 customers so far identified by the Central Bank in a scandal that, the regulator has estimated, is costing the banks €900 million.
“It raises the question: are the relevant lenders sorry for these customers or apologetic for their actions?” he said in his opening statement to the committee. “Or are these lenders glad that, to date, each has not been forced to fully correct the position in relation to these accounts?”
Mr Kissane expressed concern about “tracker fatigue” around the scandal that he estimates involved banks overcharging by €700 million.
The bulk of the additional 5,000 cases were spread mostly across EBS, First Active and KBC, he told the committee in response to questions, but there were issues with staff mortgages at Bank of Ireland and AIB.
Affected customers at Permanent TSB who had challenged their mortgage rates to a customer appeal panel had been "treated disgracefully", he said.
Emotional toll
Mr Kissane spoke about the heavy emotional toll left on customers affected by the scandal. He had come across cases of suicides and attempted suicides.
One female customer who had been overcharged had received a phone call from a bank arrears unit while in a hospital cardiac unit.
The financial stress from the scandal has led to health, isolation and relationship issues for people affected.
“The tentacles of this octopus spread everywhere,” he said.
“If someone comes to your wallet, your purse, your bag every month for seven years and takes €400 out of it, which is the average overcharge, at what point does it get in on you? And that is what happened.”
Mr Kissane questioned whether customers are receiving the correct redress given the stress involved and how people lost family homes and investment properties that would have generated rents for generations.
“What is adequate compensation? That is the question that nobody even wants to address,” he said. Most customers want to draw a line under the scandal and “just want to move on with their lives”, he said.
Discovering that you have lost your family home over an internal problem within the banks “can destroy some people”, he said. “It pushes them right back over the edge.”
AIB staff might have been affected, he said, where they could have up to €190,000 at a staff mortgage rate and further borrowings above that limit on a tracker rate that might have been cheaper than the staff rate.
The whole mortgage could have been moved to the lower rate but was not, he said.
Bank staff were in a “peculiar situation”, Mr Kissane explained, because they are challenging not only their bank but their employer and essentially writing to colleagues about a problem with their mortgage.
Customer impact
The adviser has been investigating the impact of the tracker scandal on customers for almost a decade but it took the emotional testimony of four affected customers before the committee in October, appearing alongside Mr Kissane, to pressure regulators, politicians and the banks to deal decisively with the problem.
His testimony on Thursday, however, suggests lenders are still falling short in addressing the problem.
“I began this issue in 2009 and it is not acceptable that some matters are still unresolved nine years later,” he said.
He estimated that there could be about 3,000 homeowners at EBS, now part of majority State-owned AIB, who have not been returned to tracker rates.
At Bank of Ireland, there could be about 800 cases yet to be dealt with where the bank’s own staff were supposed to have been moved to a rate that was 0.75 of a percentage point over the ECB rate but were not, he said.
Danske Bank has “a lot of questions to answer” on tracker mortgages because, Mr Kissane said, the Danish-owned bank “began the race to the bottom” when it introduced a “Loan To Value” tracker in 2006.
Tracker rates
The bank had not restored many account holders to their tracker product, even though it had stated in communications to customers that they had the option to revert to a ECB-linked tracker rate.
Belgian-owned KBC Bank has “resisted all matters relating to tracker mortgages for many years”, he said. “It has consistently attempted to suggest it never had an issue of denying people their right to a tracker mortgage, even though it was clear to me from the outset the opposite was the case.”
Mr Kissane said the level of ongoing issues with Permanent TSB, which is 75 per cent State-owned, was “staggering” and that, contrary to what the bank has said, it has not addressed issues around tracker rates.
Few of the affected First Active account holders have been reimbursed or moved back to the tracker mortgages by the lender's British-owned parent Ulster Bank, he said.
Mr Kissane said that only one of the four customers who appeared before the committee in October had seen their mortgages restored to the correct position.
“Sorry is just not good enough for what happened,” he said.
Sinn Féin’s finance spokesman Pearse Doherty said it was “disgusting” how affected customers had been treated.
Paul Murphy, Solidarity-People Before Profit TD, described the overcharging as the “effective robbery” of people.
Fine Gael Senator Kieran O’Donnell praised Mr Kissane’s work on the overcharging saying the appearance of the four customers with him in October was a “watershed moment” in the scandal.
