Tracker mortgage blame lies with the banks, financial watchdog says as AIB fined €96.7m

The Central Bank has said all blame for the tracker scandal lies with the lenders.

t comes after AIB Group was fined a record €96.7m for duping almost 13,000 customers off their low-cost mortgages.

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However, the watchdog admitted it has failed to conduct an independent review of how it had handled the €1.5bn tracker mortgage scandal, the biggest overcharging issue in Irish banking history.

Twenty-one families lost their homes as a result of the actions of AIB and its subsidiary, EBS.

AIB’s reputation has been left “in tatters”, according to the Central Bank’s director general for financial conduct, Derville Rowland.

But she said no external, independent review has been commissioned by the Central Bank into how long it has taken to sanction the offenders, despite the regulator being aware of AIB Group’s mistreatment of tracker mortgage holders for eight years.

The regulator was warned about the issue 13 years ago, but is only now fining some of the worst offenders.

The Irish Independent re- ported in October 2009 that the then Financial Services Ombudsman, Joe Meade, had written to the Central Bank, calling for a lender-wide probe into the taking of trackers from customers.

Ms Rowland admitted no independent inquiry has been conducted, even though the regulator is still dealing with the lenders’ misdemeanours 13 years after being told what they were doing.

She said no internal inquiry has been carried out in the Central Bank on how it has handled the situation. AIB’s tracker loss cases date from 2004, with the last only cleaned up last March.

Asked why it has taken eight years to get on top of the situation, Ms Rowland said the overcharging had gone on for too long, and added: “It would be wrong to say the responsibility rests anywhere except with the lenders.”

AIB breached 57 regulations in its mistreatment of its customers, while EBS admitted to 36 regulatory breaches.  

It has emerged that there is no current garda investigation into any lender over their mistreatment of tracker customers.

The Garda National Economic Crime Bureau looked in to a number of complaints from the public, but has not been able to establish any criminality or deliberate intention to defraud customers.

Around 41,000 mortgage accounts have been affected by the tracker scandal. It has cost the lenders €1.5bn in fines, compensation and redress, legal fees and administrative costs to right the wrongs.

However, it is not over yet, as there are 1,077 tracker-mortgage complaints being dealt with by the Financial Services Ombudsman.

So far this year, the office has received 46 new tracker mortgage interest rate complaints.

Two inquiries are ongoing into individuals, Ms Rowland said when asked why individuals were not being held to account.

These involve former Irish Nationwide chief executive Michael Fingleton and former Permanent TSB chief executive David Guinane.

Ms Rowland acknowledged the €96.7m fines were being imposed on a largely taxpayer-owned bank.

The money will go to the Central Bank and eventually to the Exchequer. Ms Rowland said AIB still had to be held to account, even if it was mostly state-owned.

Tracker restoration expert Padraic Kissane said the actions of AIB Group had caused “carnage” for families.

“The fine reflects family suffering. The bank was bailed out by the State but was overcharging its customers at the same time,” he said.

The tracker issue has so far cost AIB Group €730m in refunds and compensation, legal fees, administrative expenses and fines. AIB has paid more than €125m in redress and compensation to affected customers, while EBS has had to pay out €105m.

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