Fianna Fáil Finance spokesperson Michael McGrath has described the information in the public domain to date regarding the overcharging of tracker mortgage customers as potentially just the tip of the iceberg. He was speaking having raised the issue in the Dáil during a special debate on the issue today.
The scandal dates back to the period 2007 / 2008 when many mortgage customers took the decision to fix their rate in fear that rates were going to go even higher. It has since emerged that, in the case of Permanent TSB and possibly AIB, many customers were incorrectly denied the right to return to the tracker rate despite this being in the terms of their contract.
Deputy McGrath commented: “As well as the scandalous treatment of Permanent TSB mortgage holders, it is highly likely that customers of other banks have also been wrongly denied the right to a tracker rate upon the expiration of their period on a fixed rate.
“It has yet to be established if this was an industry wide practice but it is unlikely to have been an isolated occurrence. We need to get a clear picture on the extent to which banks were quietly pursuing a policy of nudging customers off their tracker rates. We have seen in previous cases, such as the PPI overcharging, that when an issue is examined in detail the problem can be far more wide spread that originally thought.
“I believe the outcome of the Central Bank’s enforcement investigation into Permanent TSB to be indicative of a worrying culture in Irish banks in which the interests of customers are not always afforded the priority they deserve. The Financial Services Ombudsman wrote to the Financial Regulator as far back as 2009 asking it to investigate whether banks were trying to remove tracker rates from mortgage holders. This raises serious questions about the tardiness of the Central Bank in dealing with this vital issue of consumer protection. They know need to clearly demonstrate that they have a handle on the full extent of the issue. This must be done in a public forum.
“In the Dáil today I outlined a 3 point action plan that I believe now must be put in place to definitively deal with this issue.
1. Any legal cases for repossession of family homes which relate to tracker customers who were overcharged should be immediately dropped. Special provision needs to be made for those whose homes have already been repossessed. Where possible these outcomes should be reversed.
2. The entire scandal should be examined in detail by the Oireachtas Finance Committee. Such a probe would include an examination of the origin of this problem, the role of the Central Bank and PTSB in dealing with it, whether it has wider application to customers of other banks, the effectiveness of the redress scheme that has been put in place by PTSB for their customers and other related issues.
3. Six year Rule: The six year rule which restricts customers making a complaint to the Financial Services Ombudsman (FSO) could limit the ability of customers of AIB and other financial institutions from vindicating their rights. Typically customers who fixed their rate in 2008 would have would have done so until 2010 or 2011. This means that, if it now transpires that they were incorrectly denied a tracker mortgage at the end of their fixed term, they have very limited time in which to pursue redress. Anyone who was denied a tracker rate in 2009 may already be out of time under the current legislation.
“It is important that mortgage holders have access to a full range of redress mechanisms including taking a case to the FSO. Fianna Fáil has already published a Bill to deal with this issue. The Bill proposes that, from the time a person becomes aware of a problem with the financial product, they would have three years to lodge a complaint with the FSO. I would urge the Minister to accept our Bill.”