Banks must pay the price for tracker rate rip-off – says Michael McGrath TD

26 November 2015
By David O’Sullivan
david@TheCork.ie

Current legislation lets mortgage lenders off the hook for outrageous behaviour – says Michael McGrath TD

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Fianna Fáil Finance spokesperson Michael McGrath has called for tougher fines and legislative sanction for banks which engage in sharp practice against mortgage customers. He was speaking following a Dáil exchange with the Tánaiste who repeatedly refused to commit to taking action against errant banks.

Deputy McGrath commented “Tuesday night’s Prime Time programme made for disturbing viewing. It told the story of banks engaging in sharp practice, wrongly denying customers who were on a fixed rate the opportunity to switch back to the tracker rate to which they are entitled. This is not an isolated practice. Very serious issues were raised in the programme in relation to practices at PTSB, Bank of Ireland and AIB.

“This issue cannot be dismissed by the government as a legacy practice from a different era. It is happening here and now. There is a widespread suspicion that banks have been using subtle and not so subtle tactics to drive customers off their tracker rate or deny them the right to return to a tracker after a fixed rate period ends.

“Despite some modest sanction the banks have simply not been held to account for outrageous treatment of customers. In simple terms they are not afraid of the Central Bank and the sanctions that can be imposed on them. Unfortunately the Tánaiste completely evaded the substance of the issue today and could not offer a single practical measure to help customers who are currently in dispute with their bank or prevent a recurrence in the future.

“There has a consistent pattern amongst Irish financial institutions of failing to admit their mistakes in dealing with customers until they are faced with overwhelming evidence to the contrary. We have heard announcements of a Central Bank enforcement action and the redress scheme put in place but the culture does not appear to have altered.

“Banks will only change when the feel the impact on their bottom line. I am proposing a significant stepping up of the monetary fines that can be imposed on banks which breach consumer codes whether relating to mortgages or other financial products. There should also be sanctions on banks in terms of being forced to hold additional capital when they consistently fail their customers. Ultimately senior executives have to be held responsible and their jobs should be on the line if it is shown that the law has been broken,” concluded Deputy McGrath.

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