Finance Committee meeting Financial Ombudsman tomorrow to discuss trackers.

9.30am in Committee Room 2.

AGENDA: Matters relating to the Tracker Mortgage Examination and the Consumer Protection Framework [Mr Ger Deering, Financial Services Ombudsman and Ms Isolde Goggin, Chairperson, Competition and Consumer Protection Commission]

I'll be in work so any updates appreciated!
 
Deputy Deasy welcomed to the Committee

Ger Deering & Elaine Cassidy (Deputy FSO)
Isolde Goggin

Ger Deering opening statement
Our goal is to redress the balance of power between the provider and the
Dealing with tracker complaints since 2009

1438
540 still open
304 withdrawn

600ish decided
17% upheld (c.100 by my calculation)
9% partly
74% not upheld

Many of these had their trackers restored

300 have been resolved directly before we made a decision

When I took office, I looked at 437 files to review them.
I engaged with CB to see what information would help them.

November 2015 I gave them my analysis.

The various triggers which caused people to lose trackers
The various reasons given by banks
Details of instructions to move rates
Relevant conditions in loan letters

Some banks said that they would not review cases where the FSO had decided. I wrote to the CEOs and asked them to review all cases, irrespective of whether the FSO had decided or not. They agreed.

I have reviewed the CB's October report. I am particularly concerned that some banks have not identified people who are impacted.

If a complainant is not happy with the compensation, they can complain to us
These complaints might bet
They did not receive a tracker rate.
They received the wrong margin
The right margin, but wrong date
They were not treated fairly

I will prioritise trackers as soon as the CB review is over

01 587 7077 is the trackers team dedicated number [email protected]

The new time limits means that some complaints which were rejected as out of scope, but now they may well be in scope.

I can look beyond the contractual terms to look at fair outcomes. I will not be found wanting in this.
 
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Isolde Goggin - Fergal O'Leary a member of the Commission

It is the CCPC's view that the way the banks have treated their customers is unacceptable

The contracts must be honoured.

We enforce competition and consumer protection legislation

we get 40,000 contacts which enable us to identify systemic issues.

Event ticketing, motor garages, residential care contracts, we have stopped thousands of unsafe practices.

Our primary role in financial services is education and information.

We run campaigns and have online comparison tools which are our most visited pages.

We focus on areas where there are gaps in consumer protection
pcp car finance, mortgage options page ; price signalling in the insurance sector
consumer help line 131,000 calls since 2014, 153 related to tracker scope

(14 minutes in ...)
Turning to the tracker mortgage issues
We have been closely following it...
We have no information to conduct a criminal investigation but we welcome any information

Customers have been let down
This form of conduct cannot be tolerated
What is most worrying is the lack of a culture of compliance.

There must be strong legislation
There must be vigorous enforcement
There must be informed consumers

(As expected, they have done nothing on the tracker issue and they know nothing about it either - same as with high Irish mortgage rates )
 
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Pearse Doherty
Given what we now know, given that 11 financial instutitutions...took or denied their customers the right rate. We know it is now in the region of 30,000 customers impacted, and value in the region of €1Billion. Is there no wee suspicion within the CPCC that they have done exactly the same thing (as the motor insurance industry)?

Isolde Goggin points out the differences between criminal price fixing and civil price fixing.

Looking at the behaviour of the bank. It's undoubtedly the case that they all started to remove tracker mortgages at the same time. But it's also the case that they were losing their shirts. So looking at it on an individual basis it was absolutely in each banks interests to get people off tracker mortgages.

And unfortunately it seems that gave rise to unscrupulous behaviour. We would need something more than the fact that it was in their own economic interests at that point.

PD
I would argue that every cartel acts in their own economic interests and I do not believe that your points add up.

(child home sick so I'm at home watching)
 
Pearse Doherty (only Kieran O'Donnell and Paul Murphy present at this stage)

Asking about motor insurance investigation.

Give what we now know, 11 lenders in the mortgage market, all denied trackers or applied the wrong rates. 30,000 inviduals. €1 billion euro.

Is there no wee suspicion in the CCPC that there might be a bit of uncompetitive practices?

Goggin: Criminal vs Civil
We don't have civil fines in Ireland.
Cartel activity is so serious, that we want to go the criminal court. But we have to be so careful about evidence. We have seen what happens when public bodies cut corners in this area. We would need a search warrant from a judge. We can't go fishing.

The banks were losing their shirts. It was in their interest to get the customers off the tracker mortgages. They had good reasons for doing this. We would need more than this for

Doherty: Every cartel acts in their own interest.
 
PD says to Ombudsman that says 'he would bet his house on it' that the FSO made errors in their 74% of historical rejected tracker mortgage complaints. They made wrong decisions over and over again and it gave a safety blanket to the banks. The FSO should review them and find out if they were rejected inappropriately and see if there are learnings from this. They need to apologise to those customers for failing them.

Personal Comment: While I didn't make a tracker complaint in 2013 but I did make a complaint in relation to MARP. The FSO has deemed the banks omission of our contract (a tracker mortgage contract) in the discovery phase as not essential to our complaint and would not have made a difference.
 
Doherty to Ombudsman

I am conscious that you were not there when these decisions were made by the office.

How many of the rejected complaints are now in scope?

Deering: A small number so far, in one particular bank have been impacted. (They are almost all in scope)

Doherty: Of the 509 that you rejected, how many were impacted

Deering: Only 3 - we don't know how many were not impacted.

Some were from people who never had trackers. e.g. They would like to have been offered a tracker, but weren't.

Pearse: Why do you not know?

Deering: We are in constant contact with the complainants and the lenders.

Pearse.Let's say that AiB has 100 rejected complaints. Have you written to AIB and asked them if they had been rejected.

Deering: No. We only get information when the complainant comes back to us. We have not got information on live complaints yet.

Pearse: You rejected 74% of complaints. Although some should have been rejected, I would bet my house that you made some serious errors. The lender tortured people based on the fact that they had an FSO decision in their favour.

You have a responsibility to review all these to see if they were rejected.

The FSO needs to apologise to these customers individually.

I commend the FSO for making sure that the banks have included all cases.

Deering: I accept that if the banks give back a tracker where we rejected, then we were in the wrong and will apologise.

The 6 year rule may have affected the decision.

Recently , I received additional information on a complaint. I contacted the bank and wasn't happy with the response. So I went to the High Court to get the decision quashed and it was.

I have met the people who failed with us but got a success at the review.

Pearse : Compensation levels

When you upheld complaints, did you award lower or higher compo than the CB review

Deering: Our compo would have been lower, but the decision would have been quicker.

Pearse: Have you had any cases of appeals of compensation.
Deering: Not yet.

Pearse: BoI's policy for non pdh which required restructuring - were charged an extra 1%. What is your view on this?

Deering: I will answer in general, not relating to any bank. You can't charge more under the CPC. (No Ger - the CCMA doesn't apply to non pdh's except in rare circumstances.)
 
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Kieran O'Donnell : How many open cases?

Deering: 540 - only 80 have been deemed impacted so far.

O'Donnell: It's unusual that the CB and FSO is doing the same work.

If only 80 of540 cases are impacted, does it mean that the trawl by the CB is not comprehensive enough.

Deering: Not everyone who complains is entitled to a tracker back. I can't tell you how likely these 540 cases are to succeed.

O'Donnell: Why did you not just continue with processing the complaint?

Deering: Because they will get the right information through the CB process.
 
O'Donnell: Miss Goggin, do you belive that hte mortgage is dysfuncitional

What do you define as a cartel?

Goggin: Yes, it's dysfunctional
Coordinated conduct to fix prices or share markets or rig bids.

ODonnell: The fact that rates are double the euro rates.

Goggin.No - we are seeing different prices

ODonnell: Why do you think that the mortgage rate is double the eu rate

Goggin: Risk and lack of competition

A lot of non performing loans - we need to price the mortgages higher

O'Donnell We had German banks saying that they could provide 10 years rates at just over 1%

Goggin: Why haven't they done it? It would be great if they did.

There is more competition now. But you can save by switching.

O'Donnell ; Surely you have a role in providing reassurance that there is no cartel. Why don't you investigate it.

The banks did not cooperate - they all did what they could [to get people off trackers]

O'Donnell: You are categorical that there is no cartel

Goggin: We have no evidence that there is a cartel. A criminal investigation needs evidence e.g. a witness who attended a meeting.
 
Senator Burke : When did you start to investigate whether there was a cartel or not.

Goggin: No we didn't have an investigation - we can't look without evidence e.g. an unexplained price rise across the board without an explanation.

Burke: You didn't ask any of the banks when did they start changing their rates

You carried out no investigation - criminal or not.

Goggin: We knew perfectly well that there were problems in the mortgage market. But we did not do a cartel investigation.

Burke: But you are investigating the insurance industry?

Goggin: It's a wider investigation. Hope it will be completed next year, but it might take two years.

Burke: Will you be doing an interim report

Goggin: Since we announced the investigation, prices have leveled off or fallen.

Fergal O'Leary: The European Commission is also investigating the insurance market.

We have a cooperation agreement with the Central Bank. So we don't investigate the trackers as there are already two players on the pitch.
 
Joan Burton speaking - wants to discuss waste management sector with the CCPC. During a tracker mortgage hearing.
That's her phone interfering with the sound.
 
Joan Burton

Household waste collection. Will you look at the salaries and wages of those working in the industry.

Joan - the clue is in the title of the meeting

upload_2017-12-7_11-28-49.png


It's very dangerous having 3 waste lorries on the one road blocking ambulances.

Will that cover prices and packages.

[Where is the Chairman - this waste of time should be stopped]

She is now onto brown bins and the incinerator.
 
At last,she asks about PCP car finance

How many contracts have been issued and how much?

CPC: About €800m outstanding. A very big market

Burton: CPC is very attractive to young male drivers especially when credit from banks is hard to access

When they later apply for a mortgage, they will be stopped by the fact that they have a €25k loan outstanding on a car.
 
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