Tracker blame lies with banks, financial watchdog says AIB raised €96.7m. has been fined

The central bank has said that all the blame for the tracker scam lies with the lenders.

It comes as AIB Group was fined a record €96.7m for defrauding nearly 13,000 customers with their low-cost mortgages.

However, the watchdog acknowledged it had failed to conduct an independent review of how it handled the €1.5bn tracker mortgage scam, the largest overcharging issue in Irish banking history.

Twenty-one families lost their homes as a result of the actions of AIB and its subsidiary EBS.

According to Derville Rowland, the Central Bank’s director general of financial conduct, the AIB’s reputation has been left in a “squabble”.

But she said there has been no external, independent review of how long it took the central bank to sanction criminals, while the regulator is aware of eight years of abuse by the AIB Group on tracker mortgage holders.

The regulator was warned about this issue 13 years ago, but now only some of the worst offenders are being fined.

Irish independent It was reported in October 2009 that the then-financial services ombudsman, Joe Meade, had written to the central bank, demanding a lender-wide investigation into the trackers being collected from customers.

Ms Rowland acknowledged there has been no independent investigation, even though the regulator is still dealing with the lenders’ misdeeds, 13 years after it was told what they were doing.

He said there has been no internal inquiry into the central bank on how it handled the situation. AIB’s tracker loss cases date from 2004, with only the last cleaning done last March.

Asked why it took eight years to recover from the situation, Ms Rowland said the overcharging had lasted too long, adding: “It would be wrong to say that the responsibility rests anywhere other than the lenders.”

AIB violated 57 regulations in mistreatment of its customers, while EBS admitted to 36 regulatory violations.

It has come to the fore that there is no current investigation by any of the lenders regarding misbehavior with the tracker customers.

The Garda National Economic Crime Bureau looked into several complaints from the public, but has not been able to establish any criminality or intentional intention to defraud customers.

Nearly 41,000 mortgage accounts have been affected by the Tracker scam. It has cost lenders €1.5bn in fines, compensation and redress, legal fees and administrative costs for wrongdoing.

However, it is not over yet, as 1,077 tracker-mortgage complaints are being settled by the Financial Services Ombudsman.

So far this year, the office has received 46 new tracker mortgage interest rate complaints.

There are two ongoing inquiries into the individuals, Ms Rowland said when asked why the individuals were not being held to the account.

These include former Irish Nationwide chief executive Michael Fingleton and former permanent TSB chief executive David Guinn.

Ms Rowland acknowledged the €96.7m fine was being imposed on the largely taxpayer-owned bank.

The money will go to the Central Bank and eventually to the treasury. Ms Rowland said the AIB still has to account for, even though it is mostly state-owned.

Tracker restoration specialist Paedric Kissan said the AIB group’s actions had resulted in “genocide” for the families.

“The fine reflects family anguish. The bank was granted bail by the state but at the same time it was charging more from its customers,” he said.

The issue of the tracker has so far cost the AIB Group €730m in refunds and compensation, legal fees, administrative expenses and fines. AIB has paid more than €125m in redress and compensation to affected customers, while EBS has to pay €105m.