Brendan Burgess
Founder
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Highlights(my selection)
Approximately 13,000 impacted accounts have been identified by lenders as at end
September, an increase of 3,100 since the March Report. Approximately 60% of impacted
accounts arise as a result of customers not receiving tracker products and approximately 40%
of impacted accounts arise from customers not receiving correct tracker margins.
To date lenders have reported
that as a result of their failings, loss of ownership has occurred in respect of 23 private
dwelling homes and 79 buy to let properties. As lenders’ analyses continue, this figure will
rise.
Similarly, lenders’ overall reviews are subject to ongoing assurance work and vigorous
challenge by the Central Bank. Accordingly, it is possible that additional impacted accounts
may be identified as the Examination continues to progress.
The Central Bank, with the assistance of its panel of experts, is evaluating the Phase 2 Reports
submitted by lenders. The primary focus of this ongoing assurance work is on customers
whom lenders have deemed not impacted and involves challenging the findings of lenders’
reviews through robust engagement in the form of on-site inspections, the review of relevant
materials and a substantial number of meetings with lenders.
While assurance work is ongoing in a number of lenders, from the assurance work completed
to date, the Central Bank is concerned that two lenders may have failed to identify
populations of impacted customer or failed to recognise that certain customers have been
impacted by their failures. The Central Bank is of the view that certain of these customers are
in fact impacted and accordingly entitled to redress and compensation. As a result of the
Central Bank’s challenges, the two lenders are reconsidering certain outcomes from their
reviews and are due to revert to the Central Bank by end October 2017. As the Central Bank
progresses its assurance work, other lenders will be similarly challenged.
Most lenders have now commenced engagement with the customers they have identified as
impacted. As at end September, lenders have rectified the interest rates applied to
approximately 7,700 impacted accounts, an increase of approximately 1,400 accounts since
the March Report, which represents 98% of customers identified by lenders as impacted to
date who require rate rectification.
A key objective of the Tracker Examination is to ensure that customers who are identified as
impacted receive redress and compensation from lenders as early as possible. However,
lenders’ initial redress and compensation proposals fell short of the Central Bank’s
expectations. Examples of material deficiencies included:
- failing to offer compensation for certain impacted cohorts of customers;
- unacceptably low offers of compensation;
- unacceptably low payments for independent advice; and
- failure to acknowledge certain types of detriment sustained by impacted customers,
including customers who switched lenders as a result of being on the incorrect interest
rate, for compensation purposes.
These material deficiencies necessitated the Central Bank to challenge lenders repeatedly to
improve their proposals, and has resulted in lenders significantly improving both their redress
and compensation proposals and their appeals processes, to the benefit of impacted
customers.
To end September 2017, €120 million has been provided to customers (approximately 3,300
accounts) pursuant to the Examination. This is in addition to redress and compensation
provided by permanent tsb plc (€36.8 million) and Springboard Mortgages Limited (€6.2
million) to customers pursuant to their Mortgage Redress Programme (MRP), which was
required by the Central Bank and predated the Examination. Accordingly from July 2015 to
end September 2017, the aggregate figure for redress and compensation to customers arising
from the MRP and the Examination is €163 million.
The Central Bank does not have the statutory power to compel lenders to implement redress
and compensation programmes in respect of failures that occurred prior to the introduction
of the Central Bank (Supervision and Enforcement) Act, 2013 on 1 August 2013. As a result,
the Central Bank cannot require that lenders implement a uniform framework for redress and
compensation across all lenders.
Three lenders have now established appeals processes for customers
who have received redress and compensation offers as part of the Examination process. The
Central Bank continues to engage with the remaining lenders regarding the setting up of their
appeals processes.
Enforcement
The Central Bank concluded an enforcement investigation in respect of tracker mortgagerelated
failures identified at Springboard Mortgages Limited on 24 November 2016 and
imposed a monetary penalty of €4.5
million on the firm in respect of those failures.
The Central Bank is currently pursuing enforcement investigations in relation to tracker
mortgage-related issues arising in permanent tsb plc and Ulster Bank Ireland DAC. Two further
enforcement investigations into other lenders are in train, and it is anticipated that more
enforcement investigations will follow. Enforcement investigations are informed by evidence
obtained and gathered as part of the Examination. Enforcement investigations are detailed
and forensic and involve the scrutiny of large volumes of documentation and interviews with
relevant individuals.
Approximately 13,000 impacted accounts have been identified by lenders as at end
September, an increase of 3,100 since the March Report. Approximately 60% of impacted
accounts arise as a result of customers not receiving tracker products and approximately 40%
of impacted accounts arise from customers not receiving correct tracker margins.
To date lenders have reported
that as a result of their failings, loss of ownership has occurred in respect of 23 private
dwelling homes and 79 buy to let properties. As lenders’ analyses continue, this figure will
rise.
Similarly, lenders’ overall reviews are subject to ongoing assurance work and vigorous
challenge by the Central Bank. Accordingly, it is possible that additional impacted accounts
may be identified as the Examination continues to progress.
The Central Bank, with the assistance of its panel of experts, is evaluating the Phase 2 Reports
submitted by lenders. The primary focus of this ongoing assurance work is on customers
whom lenders have deemed not impacted and involves challenging the findings of lenders’
reviews through robust engagement in the form of on-site inspections, the review of relevant
materials and a substantial number of meetings with lenders.
While assurance work is ongoing in a number of lenders, from the assurance work completed
to date, the Central Bank is concerned that two lenders may have failed to identify
populations of impacted customer or failed to recognise that certain customers have been
impacted by their failures. The Central Bank is of the view that certain of these customers are
in fact impacted and accordingly entitled to redress and compensation. As a result of the
Central Bank’s challenges, the two lenders are reconsidering certain outcomes from their
reviews and are due to revert to the Central Bank by end October 2017. As the Central Bank
progresses its assurance work, other lenders will be similarly challenged.
Most lenders have now commenced engagement with the customers they have identified as
impacted. As at end September, lenders have rectified the interest rates applied to
approximately 7,700 impacted accounts, an increase of approximately 1,400 accounts since
the March Report, which represents 98% of customers identified by lenders as impacted to
date who require rate rectification.
A key objective of the Tracker Examination is to ensure that customers who are identified as
impacted receive redress and compensation from lenders as early as possible. However,
lenders’ initial redress and compensation proposals fell short of the Central Bank’s
expectations. Examples of material deficiencies included:
- failing to offer compensation for certain impacted cohorts of customers;
- unacceptably low offers of compensation;
- unacceptably low payments for independent advice; and
- failure to acknowledge certain types of detriment sustained by impacted customers,
including customers who switched lenders as a result of being on the incorrect interest
rate, for compensation purposes.
These material deficiencies necessitated the Central Bank to challenge lenders repeatedly to
improve their proposals, and has resulted in lenders significantly improving both their redress
and compensation proposals and their appeals processes, to the benefit of impacted
customers.
To end September 2017, €120 million has been provided to customers (approximately 3,300
accounts) pursuant to the Examination. This is in addition to redress and compensation
provided by permanent tsb plc (€36.8 million) and Springboard Mortgages Limited (€6.2
million) to customers pursuant to their Mortgage Redress Programme (MRP), which was
required by the Central Bank and predated the Examination. Accordingly from July 2015 to
end September 2017, the aggregate figure for redress and compensation to customers arising
from the MRP and the Examination is €163 million.
The Central Bank does not have the statutory power to compel lenders to implement redress
and compensation programmes in respect of failures that occurred prior to the introduction
of the Central Bank (Supervision and Enforcement) Act, 2013 on 1 August 2013. As a result,
the Central Bank cannot require that lenders implement a uniform framework for redress and
compensation across all lenders.
Three lenders have now established appeals processes for customers
who have received redress and compensation offers as part of the Examination process. The
Central Bank continues to engage with the remaining lenders regarding the setting up of their
appeals processes.
Enforcement
The Central Bank concluded an enforcement investigation in respect of tracker mortgagerelated
failures identified at Springboard Mortgages Limited on 24 November 2016 and
imposed a monetary penalty of €4.5
million on the firm in respect of those failures.
The Central Bank is currently pursuing enforcement investigations in relation to tracker
mortgage-related issues arising in permanent tsb plc and Ulster Bank Ireland DAC. Two further
enforcement investigations into other lenders are in train, and it is anticipated that more
enforcement investigations will follow. Enforcement investigations are informed by evidence
obtained and gathered as part of the Examination. Enforcement investigations are detailed
and forensic and involve the scrutiny of large volumes of documentation and interviews with
relevant individuals.