Central Bank publishes comprehensive - ish update on tracker review

Brendan Burgess

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The Central Bank has just published its review

Central Bank publishes update report on continuing Examination of Tracker Mortgage Issues



Key points:

Useful examples given of cases where trackers had to be given back, but these were all known anyway.

No comments on the major outstanding issue - AIB's decision to set the prevailing rate retrospectively at 3.25% and thus deeming those customers unaffected.

No requirement on lenders to inform borrowers who have not been affected.
 

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Brendan Burgess

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Central Bank press statement Brendan's comments in red

Central Bank publishes update report on continuing Examination of Tracker Mortgage Issues

§ Report sets out progress being made by lenders in completing review. Details on Examination Framework, Principles for Redress and the Appeals Process published.

§ At end February, 9,900 impacted customer accounts identified by lenders. Of this, approximately €78m has been paid out in redress and compensation to approximately 2,600 accounts to date. Average redress and compensation: €30,000

§ Lenders are expected to identify all impacted accounts by end September 2017.

§ Enforcement activity set out – one investigation has concluded with two others ongoing. Springboard concluded. permanent tsb and Ulster Bank ongoing, I assume. No other bank being investigated.

The Central Bank of Ireland has published a report providing a further update on the Examination of Tracker Mortgage Related Issues. The report is the latest in a series of status updates since the Examination commenced and sets out the progress being made by lenders in completing the review. As at end February 2017 lenders’ reviews had identified approximately 9,900 impacted customer accounts. The report also sets out information on the Central Bank’s enforcement powers and activity in response to the tracker mortgage issues identified to date. The Examination Framework, the Principles for Redress and the Appeals Process set out by the Central Bank have also been published, in conjunction with the report. Are these the bits in the report, or are there separate documents?

The immediate focus of the Examination is to ensure that the interests of impacted customers are protected and that lenders prioritise the identification of impacted customers. Under the Principles for Redress lenders must stop further harm to impacted customers at the earliest possible time and must put in place a redress and compensation programme to fully address the impact their actions have had on impacted customers. The Principles for Redress also set out the Central Bank’s expectations for lenders to provide, amongst other things, additional payments to allow impacted customers to seek independent professional advice. Some lenders have already commenced redress and compensation payments. At the end of February approximately €78m had been paid out in redress and compensation to approximately 2,600 accounts identified as part of the Examination.

The Tracker Examination is a priority for the Central Bank and it has set specific timelines for lenders to complete Phase 2 of the Examination which identifies impacted customers, the last of which will be completed no later than end September 2017.

The Central Bank will take appropriate supervisory action, up to and including enforcement action where necessary, in order to ensure lenders deliver fair outcomes for impacted customers. Enforcement activity will be influenced by the outcome of the reviews currently being conducted as part of the Examination.

In line with the process to date, the Central Bank will continue to provide updates throughout the Examination. A further update will be published by the Central Bank in Autumn 2017 and a final report will also be published after the conclusion of the Examination.
 
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Brendan Burgess

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Questions for the Central Bank which those affected want to know

When the lenders identify cohorts which were not affected - did you approve those decisions? (For example AIB has a lot of customers who were entitled to trackers at the then prevailing rate when their fixed rates expired. AIB did not offer them rates. But now argue that if they had offered them trackers, they would have been at a rate higher than the SVR, so they were not affected.)

"Enforcement activity set out – one investigation has concluded with two others ongoing." The Central Bank investigation into ptsb began some time before July 205. How come it's taking so long?

"As at December 2016, 9 lenders have submitted Phase 2 reports."
Which lenders have completed Phase 2 reports? Does this mean that they have identified and contacted all those affected?
 
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Brendan Burgess

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Principles for Redress published

customers. To achieve this aim, the Central Bank has developed and issued to lenders a set of Principles for Redress (being published in tandem with this report) which clearly set out its expectations of lenders in this area, as follows:

It's not clear to me if there is a separate document or if it's the following:


1. Stopping further harm to impacted customers
 As soon as groups of impacted customers are identified, any harm potentially being caused to them must be stopped at the earliest possible time;

 This includes ceasing charging impacted customers the incorrect interest rate and applying the appropriate tracker interest rate (or, where this cannot be determined, applying an interim reduced interest rate); and

 Lenders are required to submit detailed information in relation to the controls they have put in place to ensure no further loss of ownership events occur or litigation is progressed in respect of potentially impacted customers. The Central Bank has and continues to challenge lenders in respect of the adequacy of these controls.

2. Redress and compensation to impacted customers
 All redress and compensation programmes must at least return impacted customers to the position they would have been in had the relevant issue not occurred;

 Redress and compensation is to be paid to customers up front at the point of offer;

 Redress and compensation offers cannot be reduced by virtue of a customer lodging an appeal;

 Compensation must be reasonable and reflect the level of detriment suffered;

 Redress and compensation programmes must be fair, clear, provided in a timely
manner and be easily accessible for impacted customers;

 Where impacted customers are identified, lenders must develop a specific redress and compensation programme to address the impact on those customers and submit it to the Central Bank for re view prior to implementation. The Central Bank has and will continue to challenge lenders in respect of the development of these programmes to ensure that they are as customer-friendly as possible; and

 Lenders must have appropriate governance and clear lines of responsibility around their redress and compensation programmes and such programmes must be overseen at board level.
 

Sarenco

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Does the 9,900 people affected include the 3,916 BoI cases which were on trackers, but which were being overcharged by 0.15%? I presume not, as they were on trackers.
I think it does Brendan - footnote 8 on page 27 relates to the 9,900 figure:-

"Approximately 60% of impacted accounts arise as a result of customers not receiving a tracker product and approximately 40% of impacted accounts arise from customers not receiving the correct tracker margin."
 

Sarenco

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"As at December 2016, 9 lenders have submitted Phase 2 reports."
Which lenders have completed Phase 2 reports? Does this mean that they have identified and contacted all those affected?
"Lenders have commenced contacting impacted customers identified as at end February 2017, and have rectified the interest rates applied to such impacted customers’ accounts, thus stopping further detriment, on over 90% of identified impacted accounts requiring rate rectification as at the date of this Report.

The Central Bank is in the process of reviewing Phase 2 reports that have been submitted by lenders. The Central Bank has and will continue to challenge lenders with regard to the content of their Phase 2 reports and their activities related to the Examination. Lenders will not be considered to have completed their reviews until the Central Bank has completed its review and assurance work."

The Central Bank obviously feel constrained by their statutory confidentiality obligations from naming the laggards who have yet to submit their final Phase 2 reports.
 

Brendan Burgess

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I think it does Brendan - footnote 8 on page 27 relates to the 9,900 figure:-

"Approximately 60% of impacted accounts arise as a result of customers not receiving a tracker product and approximately 40% of impacted accounts arise from customers not receiving the correct tracker margin."
Well spotted. Thanks for that.

So it's really only 6,000 seriously affected.

Brendan
 

Sarenco

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Interesting that the final Phase 2 reports were originally supposed to be submitted to the Central Bank by end-September 2016 and this deadline has now been pushed back by a full year to end-September 2017.

Why?

The majority of lenders have already completed and submitted their Phase 2 reports so why are the laggards being given such a generous time extension?

The Central Bank has been receiving monthly updates from all lenders so it's not like this issue crept up on the Central Bank. Has the Central Bank called in the senior executives of the laggards to explain this unacceptable ongoing delay to bring this process to a conclusion?
 
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Freshstart

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"Compensation must be reasonable and reflect the level of detriment suffered" seriously!? Well in that case be there be further sanctions against PTSB for their miserable failure at this.
 
S

SirMille

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Principles for Redress published

2. Redress and compensation to impacted customers
Redress and compensation offers cannot be reduced by virtue of a customer lodging an appeal;
That green lights an immediate appeal.
 
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SirMille

Guest
If I squint while reading it, I can see lots of vague weasel words that tells me they will try to nickel and dime us, without an ounce of remorse.

For example, with one reading, several people noticed that the sums involved is not compensation but actually repayment of money owed. Let me ask you all this, how many hands did this phrasing pass through, and none of them questioned this.

Maybe not, who can really tell.
 

Onceagain

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It's the time it's taken and the lack of transparency, it's difficult sitting on the side line looking out, and unable to do anything. Hopefully they get what is an extremely difficult job done, asap. I don't envy it, it's the banks that caused this, lets be clear.
 
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