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Central Bank (Amendment) Bill 2018: Second Stage [Private Members] (Continued)

Wednesday, 14 February 2018

Dáil Éireann Debate
Vol. 965 No. 5

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(Speaker Continuing)

[Deputy Michael D'Arcy: Information on Michael D'Arcy Zoom on Michael D'Arcy] To that end, I propose that we continue with the current approach which involves a wide range of stakeholders to ensure we achieve the best solution. I assure the House that Deputy Pearse Doherty's Bill will be fully taken into account in the Government's forthcoming proposals which I outlined.

Tracker mortgages have been mentioned here frequently. The actions of the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, were strong. I refer to when he brought in the main lenders on this matter. It is owing to his actions that the institutions are bringing this matter to a conclusion in the manner they are, for which the Minister should be complimented. Nobody wants to be soft on white collar or blue collar crime or any type of crime. That is not what anybody in this House wants.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath I am sharing time with Deputies John Brassil and Jack Chambers.

  I welcome the opportunity to contribute on Second Stage of the Bill which we will be supporting. I raise with the Minister of State a current issue that is relevant to Central Bank regulation, namely, the proposed sale by Permanent TSB of a portfolio of loans. Yesterday the institution made a statement that it was going to proceed with the sale of the Project Glas portfolio, giving no details of its composition, the number of loans, the book value or whether the loans were mortgage loans, loans to SMEs or other types of loan. It has been reported on this afternoon that Permanent TSB plans to sell non-performing loans worth €4.5 billion and that close to €3 billion worth of these loans are family home mortgages. Close to €1 billion relates to buy-to-let properties. As the Minister of State well knows, if such a sale proceeds, the loans will inevitably be bought by vulture funds. Owing to the decision made by the previous Government, vulture funds are not fully regulated in Ireland. We have credit servicing legislation, under which the intermediary has to be regulated, but the fund does not need to be. The sale must not proceed. It is completely unacceptable that family home mortgages would be sold from under people's feet in this manner to a vulture fund. This issue needs to be addressed as a matter of urgency. I have called on Permanent TSB to clarify its intentions and call on the Minister for Finance to do likewise.

  We are all aware that the ECB is placing pressure on Irish banks, particularly Permanent TSB, to reduce the value of their non-performing loan books. However, doing so in the manner I have described is not acceptable. There is no reason Permanent TSB cannot work its way through its loan book, engage with customers, restructure loans and write off debts, as necessary. However, it is taking the easy option and outsourcing its dirty work. That is exactly what will occur if the sale proceeds.

  The Minister of State will be aware that the Oireachtas finance committee invited representatives of all of the vulture funds before it. Tanager, Capita Asset Services, Blackstone, CarVal Investors, Cerberus, Lone Star Funds, Mars Capital and Oaktree Capital declined its invitation. Starwood Capital and Apollo gave no response. That is what one is dealing with. These bodies are unregulated and unaccountable. It is not acceptable that loans belonging to Irish businesses and family home mortgages may be sold in this manner. I want the Minister of State to take this message back to the Minister, Deputy Paschal Donohoe, to whom I wrote yesterday on the broader issue of loan portfolio sales. I look forward to an early response.

  We welcome the Bill. We support its thrust in that it provides for the Central Bank to conduct inquiries into the suspected provision of false and misleading information and to impose sanctions where such information is provided. Much has been said so far about the tracker mortgage scandal. With other members of the finance committee, including Deputy Pearse Doherty, I have devoted considerable time to this issue, particularly in recent months. It is worth reflecting, however, on the backdrop to it which very much feeds into the spirit of the Bill. It was on 28 November 2009 that Charlie Weston of the Irish Independent wrote an article in which he stated the then "Financial Services Ombudsman Joe Meade has demanded all mortgage lenders be probed to ensure they are honouring agreements allowing people to retain their tracker mortgages". In the following years, 2010 and 2011, some mortgages were dealt with on an individual lender basis. In the case of Bank of Ireland, for example, 2,100 were dealt with, but there was no industry-wide probe until 2015. In October 2015 it was announced by the Central Bank that there would be an industry-wide tracker mortgage examination. It sent out the full details in December 2015. Over two years later, there are still thousands of mortgage holders on the wrong rate. Even today they are being denied their contractual entitlement to be on a tracker mortgage rate. Information from the banks suggests that by June this year all of the customers will be on the correct rate. I am not convinced of this, based on the banks' performance so far. In September 2017 we were told that there were approximately 13,000 mortgage accounts affected. The number has increased dramatically, to under 27,000 in this Central Bank examination. A further 7,000 or so predate that examination.

  The evidence is very clear. Throughout the process, the banks have been dragging their feet on this issue. It has been an horrendous battle for individual customers who are not equipped to take on the might of the financial institutions, which is why they rely on the State authorities to perform their functions. Ordinary people lead busy lives. They are busy going to work, rearing their families and going about their day-to-day duties. It is incredible that the denial of trackage mortgages to those who were entitled to them was raised with the regulator in a formal way by the Financial Services and Pensions Ombudsman in 2009 but that clearly there was no adequate response. There was not an adequate response for years.

  What the Minister of State said in complimenting the Minister, Deputy Paschal Donohoe, was incomplete. To be fair, the Oireachtas finance committee has led the way on this issue. The principal credit has to go to the mortgage holders who are directly affected and were brave enough to come, bare their souls and tell their personal, human stories in a public forum and to the media. They are the ones who deserve the most credit for what has been done, but the journey is not over. The battle is not over; it continues, but we will stay with the customers every step of the way until they get justice and all of their entitlements.

  There is absolutely a need for greater accountability. It is demoralising to trace the history of recent years and examine how the most recent tracker mortgage scandal has evolved. I have long arrived at the conclusion that until those who were directly involved and consciously made decisions to deny people their contractual rights are held to account, this scandal will arise again. It is just a cycle. It might go quiet for a while, but there will be another financial scandal.

  We had a payment protection insurance scandal. Some €67 million was paid out by lenders to people who had wrongly been sold payment protection insurance policies. Probably multiples of that figure were not refunded because of the Statute of Limitations, to which Deputy Pearse Doherty referred. Anyone who bought before the middle of 2007, for example, falls into this category. It leads to the tracker mortgage issue.

  We need accountability not only at the level of the institution but also at the level of the individual and it needs to be evidence based. The enforcement investigations need to be thorough. Investigators need to go through the minutes of meetings, email correspondence and records of telephone calls to establish whether conscious, deliberate decisions were made to deny people their contractual rights. That is the key issue. Fining banks is not enough. We all know what happens when banks are fined; they pass on the cost to their customers. In particular, they pass it on to variable-rate mortgage and SME customers. Those in both categories are already paying well over the odds for credit by comparison with customers in other eurozone countries. That is the point. Therefore, fines are not the answer. There has to be individual accountability.

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