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Suspected criminal activity over tracker mortgage scandal reported to Gardai

The Central Bank reported suspected criminal activity to the Garda following an examination of the treatment of tracker mortgage customers.

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The Garda logo on a Garda vehicle in Dublin (Brian Lawless/PA)

The Garda logo on a Garda vehicle in Dublin (Brian Lawless/PA)

The Garda logo on a Garda vehicle in Dublin (Brian Lawless/PA)

The Central Bank has reported suspected criminal activity to the Garda over the tracker mortgage scandal, an Oireachtas committee has heard.

The bank’s director general of financial conduct Derville Rowland told the finance committee that a report had been sent to gardai following its investigation into the treatment of tracker mortgage customers by some lenders.

But Ms Rowland said she was not in a position to comment on the possibility of criminal proceedings against some lenders.

“I’m not in a position to furnish further information to the committee but I can confirm we have made those statutory reports,” she said.

Ms Rowland made the remarks in response to questions from Sinn Fein’s Pearse Doherty as representatives from the Central Bank appeared before the committee on Wednesday.

Asked by Fianna Fail’s Jim O’Callaghan whether criminal prosecutions may arise from the behaviour of some banks in the tracker mortgages scandal, Ms Rowland said: “I couldn’t comment in respect of any actions any agency could or would take outside of our own.”

She told the committee the Central Bank, as part of its regulatory obligations, had a duty to report reasonable suspicions of criminal offences to the Garda.

She added that the bank had liaised “very closely” with the Garda throughout the tracker mortgage investigation “in respect of issues and evidence that arose”.

The governor of the Central Bank told the committee said 41,700 customers had been affected by the tracker mortgage scandal and that to date 708 million euro had been paid by banks in redress and compensation following the regulator’s examination of the matter.

Gabriel Makhlouf said repayment breaks offered to borrowers at the onset of the pandemic whose incomes had been affected by the lockdown had helped struggling homeowners, in particular those whose income had been reduced only temporarily.

He told TDs, by early October, there were just under 54,000 active payment breaks associated with Irish household and business borrowers.

“40% of active payment breaks for Irish borrowers relate to mortgages, representing 3.4% (or 21,322) of outstanding Irish mortgages,” he said.

“Active payment breaks for Irish borrowers have reduced by 65% since the end of June (or a reduction of over 98,000), as borrowers start to return to repayment arrangements.

But he said the global financial crisis had shown that mortgage repayment breaks were “not effective” in addressing more permanent income shocks.

“In the past we have also seen that lenders may be incentivised to rely excessively on temporary forbearance measures which may not be in the borrowers’ best interests over the longer term,” he said.

“One important lesson from the previous crisis is for early engagement between borrower and lender to prevent the build-up of arrears.”

He noted that the Banking and Payments Federation of Ireland said lenders were prepared to offer appropriate support “to those borrowers who need it” due to the move to level five restrictions.

Mr Doherty said the banks had been urged to deal with customers sympathetically and effectively but the reality was that they were not dealing with people in such a manner.

He listed a number of testimonies of people who had availed of payment breaks earlier in the year and had not received an alternative arrangement from their banks.

“Do you accept that there’s a different reality out there and that expecting banks to do the right thing for their customers is simply naive?,” Mr Doherty asked.

The Governor replied: “I do expect banks and lenders to treat their customers sympathetically in line with the consumer protection code and the Central Bank’s very clear expectations and also in line with commitments the banks themselves have made publicly.

“So if there are cases of this not happening we absolutely want to know about them. 

“But I don’t think it’s naivety.”

Speaking about economic forecasts, Mr Makhlouf said the future of the Irish economy depends on the path of the virus and the speed at which a vaccine is developed.

He said the bank still expects a “gradual recovery” in the economy over the next two years, despite level five restrictions being introduced for the next six weeks.

But, he said, if there were repeated lockdowns during that time, the economic forecasts made would be limited.

“Not only do we live in very uncertain times but times that are also potentially changing the structure and shape of our economy,” he said.

“The best we can do is manage the health.

“I personally don’t see a choice between the economy and health.

“A healthy economy requires a healthy workforce, healthy consumers and a healthy community.”

He added the Government should be focusing on getting the pandemic under as much control as possible so the economy could be reopened.

But he warned that by the time that happens consumers may have changed their spending patterns.

He also warned that one of the economic risks the country was facing is the mental wellbeing of the population and that addressing people’s mental health was “as important” as measures such as straining schemes to get people back to work.

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