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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 Jack Chambers: Information on Jack Chambers Zoom on Jack Chambers] That is why this Bill is welcome. It is important that bankers know the consequences at every level if they commit a criminal offence or lie to the Central Bank. If the bankers do not provide accurate information and continue a culture of lying to the benefit of their balance sheets over the customers, who subscribed to them in good faith and with goodwill many years ago, then there should be an accountability framework and criminal consequences.

As I said, we have contradictory State policy at every level. At one level, the Government is trying to sell the banks to pay off the banking debts. At another level, we are throwing people out of their homes and making them homeless. What type of country or government would stand over those practices?

I welcome the fact the Government is facilitating the Bill and allowing it to go to Committee. I am keen to see this legislation brought through the Oireachtas quickly so that we can finally end the cultural component in our banks in the past decade that amounts to a thread of lies. The Bill will at least initiate some reforms in order that we can see bankers tell the truth for once. We can then rebalance things in favour of ordinary householders and people with vulnerable mortgages.

Deputy Joan Burton: Information on Joan Burton Zoom on Joan Burton How long do I have?

An Ceann Comhairle: Information on Seán Ó Fearghaíl Zoom on Seán Ó Fearghaíl You have eight minutes, Deputy.

Deputy Joan Burton: Information on Joan Burton Zoom on Joan Burton The Central Bank now has in legal terms a comprehensive regulatory and supervision framework. Yet, we hear all the time from our constituents and people in broader society about how difficult their lives are as a consequence of issues related to tracker mortgages, commercial loans and buy-to-let loans. The banks were offering all of these with abandon when the financial boom was under way. Of course, being bankers, when the rainy day arrived, they immediately pulled away the umbrella and left people facing years of serious uncertainty. In many cases people were uncertain about whether they would be able to continue to hold on to their family home or buy-to-let, which they were encouraged to buy by the bank at the height of the boom. People were uncertain about where this would leave them.

The Central Bank now has a comprehensive regulatory and supervision framework. The Central Bank supervises all the regulated entities, banks and other financial institutions and they must comply in detail with Irish and EU rules. The Central Bank is charged with ongoing supervision of those banks. More information is now being given to the Central Bank on a regular basis in respect of the banks and their lending profiles, borrowing, balance sheets and so on.

We have a framework of rules, many of which derive from European Central Bank regulations. The Central Bank has a process for the orderly resolution of credit institutions where problems arise. The bank also has an enforcement function.

There has been a significant increase in the number of staff now employed in the Central Bank. The figure is approximately 1,600 at the moment in the new "golden bank", as it is called, on the quays. That expression is used because the outside of the building has a gold-coloured mesh. I know many children call the building the gold building because if a person is walking down the quays, from a distance that is what it looks like. Anyway, the consumer experience of services from individual financial institutions and the way the Central Bank responds to problems is far from adequate. For that reason, the Labour Party is happy to support the Central Bank (Amendment) Bill 2018, as initiated.

The jury is out on whether the Bill will substantially change the current scenario. This is because bankers tend to be robust when it comes to their rights and even more robust about the responsibilities of others when problems arise for products that they have sold to people, including loan and investment products.

The Central Bank is meant to have responsibility to ensure that consumers are protected when it comes to financial products. I am referring to consumers in the broadest sense of the term, not only individual consumers but businesses as well. Anything that provides for greater levels of responsibility in that respect, which the Bill is seeking to do, or that involves potential penalties where regulations are breached or where institutions fail to honour the legal rights of consumers is to be welcomed.

News unfolded yesterday that Permanent TSB is likely to sell a large portfolio of loans, potentially to private equity vulture funds. We do not know yet where the bank will target the sale. Anyway, that bank is identifying non-performing loans and planning to bundle them and sell them.

I imagine the experience with loans has been difficult for many businesses. We are in an economy where property values have recovered for reasons we are all aware of. Many businesses and individuals are back on their feet. It should be possible, therefore, to find resolution to many of the loans in question. I am aware that there have been some attempts by Permanent TSB to identify some of those cases. Nonetheless, it is an extraordinary risk for consumers and small businesses in particular if another significant bundle of loans appears to be about to be auctioned off.

Previously, the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach issued an invitation to representatives of various financial institutions to discuss issues before the committee. Representatives of the banks, by and large, were prepared to appear, respond and discuss issues with the committee. However, those from the vulture funds all declined. There is a serious issue here. There is in effect no mechanism of accountability that I am aware of for these institutions. The powers of the Central Bank in respect of such institutions have not been absolutely clarified. Again, I am unsure whether this legislation will be able to address that issue.

The Minister has been critical of the Central Bank for not allowing new institutions to Ireland fast enough where they may be coming in the context of Brexit. In that context, I believe the Central Bank is being careful to ensure people have the right credentials to set up a financial institution here and comply with European regulations. However, it is not clear what can be done by the Central Bank where banks treat customers in an appalling way. There is a need to have a clear structure for how these issues are dealt with. There should be penalties where the banks fail to deal properly and fairly with customers, whether individual domestic customers or commercial customers. That is important.

The Labour Party will support the legislation. We welcome the fact the Government is going to accept the legislation. Certainly, if the Minister has identified ways in which the legislation can be improved, then I would like him to return to the Dáil and give us the details.


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