You can watch the Central Bank at the Oireachtas Finance Committee now

Brendan Burgess

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Starting now. - Tracker issue first and then other issues

Philip Lane - Governor
Derville Rowland - Director General for Financial Conduct - including consumer protection
Ed Sibley Deputy Governor - prudential regulation
Sharon Donnnery - Deputy Governor -
 
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Brendan Burgess

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All lenders did not recognise problems until we intervened.

We had to use the limits of our powers to get them to comply.

If they had followed our guidelines, they would be further along now.

As part of Phase 2, they must identify those "in scope but not impacted" (I wasn't aware of this distinction, but it makes sense.)

Category of detriment ranges from the wrong tracker rate up to losing a property.


A causation analysis must be carried out when loss of ownership happened.
 

Brendan Burgess

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We are challenging two lenders on their categorisation of people as not affected. We expect to challenge others in due course.
 

Brendan Burgess

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We don't have the power to impose redress and compensation for events which happened before 2013.

But we have made our expectations clear

But the initial proposals were not always acceptable.

Failing to offer compensation
Low offers compensation
Low payments for independent advice
Failure to recognise ... including those who switched lenders
 
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Wardy7

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Now I know a presentation is a presentation.....but come on.....nothing in that opening statement that we didn't already know!!!
 

Brendan Burgess

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McGuinness
The limits of your powers? Would you like to comment? Do you want more powers?

Lane
The legislation in August 2013 was not retrospective
We have power for any events since then, but not for any trackers as they happened before that.
So any new powers would not help.

We did have the power to produce the reports. But the compensation is from our moral suasion - We told them: "You are better off doing this on a voluntary basis, or else you will be dealing with the FSO and the courts"

Rowland: We developed our approach from the ptsb investigation. We have a lot of powers. We have used the 2013 act for information gathering purposes.

An enormous exercise - 2 million accounts. (How is there 2m? No wonder it's taking so long.)

Phase 2 deadlines have been met, but we weren't always happy with the results.

Dealing with the impact on people at the end of the process was the wrong way around.

Repossessions of those affected were put on hold in case they were contaminated.

We demanded that any time bar issues would be put in abeyance.

We have a full suite of enforcement powers which have been challenged in the courts 5 times.

We have encouraged the banks to put consumer protection at the heart of their culture - irrespective of the legal requirements.

To propose that there would be no appeal is unacceptable.
 
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Brendan Burgess

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The disagreement has reached an impasse with some lenders.

We have the power to tell them to identify by name the people and to write to them telling them their rights.

We have spoken to the FSO so that the 6 year time limit won't apply.

We have redress powers. But we don't have compensation powers.
 

Brendan Burgess

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Pearse Doherty

Given that they are being overcharged at present, do you not have the powers under the 2013 Act do deal with them. (Great question.)

Rowland
Some timing issues
Rate rectification - those who have been identified, rate rectification has occurred in 98% of cases.
Others who no longer have a tracker...

Pearse:
You are in dispute with two banks about the inclusion of some cohorts - so do you not have the powers to impose a solution on them.

Rowland:

We would have to resolve that dispute. We would have to have it out on a factual legal basis. This would have to be resolved by the law.

Pearse: Can you name the two lenders?

Rowland: There is no power to order compensation in the 2013 act. We do have the power of redress, but that would be subject to the issue being legally resolved.

But we have to fully crystallise the dispute.

Lane:
If the banks say "We are in line with our contracts" we try to persuade them, rather than go into legal issues with them.

We can't say "We believe this, so therefore you must immediately change your policy. In most cases, the banks do concede to our views. It will be quicker if they agree."

Pearse
I am shocked that you tell us that you think some people are affected,but that the lender disagrees so all you can do is tell them to go to the Ombudsman.

Lane
The current strategy is delivering for the vast majority of customers. If we focused in on the post 2013, people would lose out between 2008 and 2013.

It has worked for most lenders. It will work for some others. We will have a few where we don't agree.

We have pushed back on many occasions, and have succeeded in persuading the lenders to our point of view.

Pearse: How many individuals are in those two banks

Lane: Significant. We can't give too much guidance.

Pearse: Is it in the hundreds or the thousands?

(Yet again the phones are interfering with the sound. Why don't they just tell them all to completely switch off their phones? update: turned out to be Lane's iPad.)

Lane: We are governed by confidentiality rules. When we agree a sanction, we do publish it. The banks can disclose, but we can't.
 
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Brendan Burgess

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Michael McGrath:

When will this nightmare end?

Lane: Some are almost completed. Others have started. Appeals Panels have to be set up yet.

There will be a long tail as some will go to the Ombudsman or the Court

In the cases where they are deemed not in scope, they will go on for a long time.

Lane: A lot will happen before the end of the year and the first quarter of 2018

McGrath: At what level are you dealing with in the banks?

Lane: At all levels. Ed meets the CEOs and Chairs , typically on a quarterly basis and we always raise this issue.

Rowland: There is extensive legal engagement directly and sometimes we receive ghost letters i.e. those written by outside firms.
The lenders are very well advised.

McGrath: So it has become a very legalistic obligation

Lane: There will be areas of ambiguity. the original contract, ads, broker communication.
(phones still interuupting it. - it's Lane's iPad.)

They sometimes had a narrow view of who had been affected.
They had low compensation.

McGrath
How many of the 15 lenders have affected customers
Lane: 11 - the others didn't offer trackers.

McGrath: I don't believe that this was an accident. Are you going to find out how this happened?

Lane: Culture - There is a common culture across the banks to interpret an ambiguous contract in the bank's favour.
Given the movement in interest rates, the economic incentive was great

So there are common factors - they were in a similar situation.

Rowland: In each of the enforcement investigations,we will be looking to see if rules were breached. We will need to interview executives. We will examine board minutes.

Lane: Have you found any evidence to report stuff to Gardai or have you had to invoke the Fitness and Probity.

Rowland: Fitness and Probity can only apply if people are still working in banking.

We have met the Gardai and other agencies. But we have made no formal reports under Section 33 AK.

McGrath
What is the advice to people who feel they have been affected who have not heard from the bank?

Rowland: Good question. They should make a complaint to the lender as the lender is obliged to write back. Plese encourage your constituents.
 
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Lightening

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Missed the bit about the brokers, marketing material, communications etc! His iPad was on!

Anyone get that?
 

Brendan Burgess

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McGrath

The prevailing rate of AIB 3.67% and ptsb 3.25% ? If the bank determines that they were affected, but put on the high rate.

Is that a live issue for you with AIB and ptsb?

Lane: We can't name. In general, these issues are fully within what we are looking at.

Regardless of what the banks decide, those affected can go to the Ombudsman or the Courts Service.

McGrath: Is that issue in scope

Lane: Absolutely is something we are looking at.

McGrath: two lenders have not identified cohorts as being affected
Can you give us examples?

Lane: Two levels
1) When did you take out the tracker? Was it april 2006 or May 2007? The bank says that there is no issue. WE say that they are. (Sounds like the AIB pre 2006). And could include scenarios where people have switched lender.
 

Gavin77

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I'm sorry for asking what some may think is a silly question but I don't understand.
If they have no power pre 2013... which was when most of the damage was done... how can they refer you back to ombudsman that already said no to you. I'm hoping I got it wrong as that couldn't make sence can anyone enlighten me???
 
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Wardy7

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They have no power dating back but they are "encouraging" banks to look again. I assume that will apply to FSO too?
 

Brendan Burgess

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Senator Rose Conway Walsh

What about people who were told that they were not in scope.

Rowland: They should write a letter of complaint.

Lane: Everything is starting from new. Even if they got that letter in the past, they should complain again.

Rowland: How many people do you have working on this?

Lane: 26 + our own advisors
 
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Lightening

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I hope we can get the notes on all this info on fraud at a later stage:mad: system is down! What timing!
 

Brendan Burgess

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Lane (In answer to yet another question from Paul Murphy on collusion between the different banks.)

Even if there had been zero interaction, they faced the same common problems, so they would have done the same thing.
 
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