Richard Curran: Time for plain talking about who is to blame for tracker scandal

Brendan Burgess said:

Mistakes are not generally criminal. I think that intent is required, unless it's criminal negligence.

It possibly amounts to the high bar required for fraud. But it's more likely that it doesn't.

Brendan

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Sharp practice isn't generally criminal either. The bar for fraud is indeed set at a very high level.

Brendan Burgess said:

Mistakes are not generally criminal. I think that intent is required, unless it's criminal negligence.

It possibly amounts to the high bar required for fraud. But it's more likely that it doesn't.

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Do you not think that the decision to remove trackers was taken at a high level, that it was deliberate and there was some intention there to do so. Obviously the intention was to make more money for the banks on the loss making trackers, but if they sat at a board meeting and decided to intentionally deprive customers of tehir contractual rights knowingly than the intention to defraud is surely there. It would be even more so if they had legal advice from their inhouse counsel that they were acting contrary to the contracts. We have no way of knowning of course because none of us has access to how the decison was taken to go down this route. I'm surprised the Central bank hasn't asked the banks how it happened. And asked for the revelevant notes from the meetings on this.

Bronte said:

decided to intentionally deprive customers of tehir contractual rights knowingly than the intention to defraud is surely there.

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Bronte, that is a huge "if". I have not seen any case where there was a clear contractual right not upheld. In every case, the bank had a different interpretation of the contract. To be fair to the lenders, in most cases they were clearly within their contractual rights, but they lost their cases with the FSO because they did not explain things , e.g. the implications of fixing, clearly enough.

Bronte said:

It would be even more so if they had legal advice from their inhouse counsel that they were acting contrary to the contracts.

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If they had clear and unambiguous advice that they were in breach of their contracts, then that would be serious. I would doubt that they did anything in clear breach of contract.

For example, the most glaringly obvious wrong issue as far as I am concerned is AIB setting the prevailing rate in retrospect. But it's their interpretation of the contract. I don't think that the Central Bank should tolerate it. But I don't regard AIB's stance as criminal or fraudulent.


Brendan

Brendan

Taking one example

Some Aib contracts had three options, one of which was tracker.

AIB managed to interpret this so as not to return customers to tracker.

I think their justification was that trackers were discontinued.

Clear breach of contract.

Indefensible.

To me that's fraud.

15,000 customers in total have been rightly returned.

But others still have not.

I don't think it's helpful to have a "consumer advocate" making excuses for the banks.

moneymakeover said:

Some Aib contracts had three options, one of which was tracker.

AIB managed to interpret this so as not to return customers to tracker.

I think their justification was that trackers were discontinued.

Clear breach of contract.

Indefensible.

To me that's fraud.

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It's fairly clear to me that they should have offered trackers to these borrowers.

It's also clear to me that their interpretation was reasonable and yet open to challenge.

It is absolutely defensible, even if I disagree with them.

And it's absolutely not fraud.

Brendan

moneymakeover said:

I don't think it's helpful to have a "consumer advocate" making excuses for the banks.

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So it is not OK for the bank to deceive, lie etc... but it is OK if it is to your benefit!

Bronte said:

Do you not think that the decision to remove trackers was taken at a high level, that it was deliberate and there was some intention there to do so. Obviously the intention was to make more money for the banks on the loss making trackers, but if they sat at a board meeting and decided to intentionally deprive customers of tehir contractual rights knowingly than the intention to defraud is surely there.

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Banks sell product like any other company and of course if they have a loss make they will discontinue it. Indeed it could be argued that they have an obligation to their shareholders to exit such products as soon as possible. You cannot claim that such behaviour is criminal in one company and fine in another company, just because it happens to impact you.

Am I missing something here? Who are the consumer advocates and for which banks?

Jim2007 said:

Banks sell product like any other company and of course if they have a loss make they will discontinue it. Indeed it could be argued that they have an obligation to their shareholders to exit such products as soon as possible. You cannot claim that such behaviour is criminal in one company and fine in another company, just because it happens to impact you.

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They can exit *offering* such products, but they entered into a legally binding contract to provide the product which they have to honour.
I think there was a deliberate decision taken to interpret the contracts in such a way as to favour the banks.
There was breach of contract, no doubt.

Was there legal fraud? I'm not sure. The bar as Brendan notes is quite high, and I think we should respect his opinion on that.
I think in some jurisdictions it would be considered a criminal case. I have no doubt if this happened in the USA, we would have seen perp walks of banking staff in handcuffs by now.
But even if it was criminal in Ireland I would not trust AGS to progress it.

Was it ethical (i.e. professional) fraud? Yes, for sure. I have no doubt that there was a deliberate, concerted, conscious attempt to pull the wool over the eyes of customers, to the advantage of the banks - customers to whom they have contractual and professional responsibilities.
Everyone involved if this should be identified and stripped of all qualified financial advisor qualifications and all professional certifications and reset to zero - and for those at director level, disbarred for such responsibilities. If that means people lose their jobs, so be it.
They had a chance to honour their professional ethical responsibilties, they failed.
If jobs were lost, this would never happen again, because the staff would say no, if we do this, our jobs are at risk.