The Board highlights the human cost of tracker failings

23 June 2022: The Irish Banking Culture Board (IBCB) notes today’s announcement and fine from the Central Bank of Ireland (CBI) in relation to its investigation of the sale and withdrawal of tracker mortgage products by Allied Irish Banks (AIB) and EBS. This significant fine of €96.71 million follows combined fines of some €76m2 already imposed by the CBI on PTSB, KBC Bank Ireland and Ulster Bank DAC for similar issues.

These fines are unprecedented and reflect the gravity of the CBI’s findings, however it is essential that the human cost of the tracker mortgage related failings by the industry is not overshadowed by the size of the CBI fines and the costs of redress. In many instances this human cost is impossible to quantify, particularly given the financial impact coincided with the wider national and global economic crashes with resultant negative income consequences for many.
The CBI estimated in 2019 that some 315 homes (family homes and buy to lets) were lost as a direct and indirect result of trackers (through repossessions and voluntary surrenders3), however the impact on mental and physical health and family life, of the immense stress and distress caused to so many, the opportunities and aspirations foregone or postponed, is impossible to calculate, but no less real.

The establishment of the IBCB was a recognition from the five Irish retail banks that their behaviour in relation to tracker mortgages was not acceptable, and an acknowledgement that fundamental cultural change was required. All five of our member banks have apologised publicly for their behaviour which resulted in such widespread customer detriment, but it is actions not words that are essential in this context.

Our focus since our establishment has been to ensure that our member banks take action in relation to cultural change and, learn lessons from the unacceptable behaviour that led to the Tracker Mortgage investigations, and introduce measures to protect bank customers from similar issues arising again. The banks are making strenuous efforts in this regard and while progress is being made, much work remains to be done. There is no fast fix in changing the perceptions of culture of a sector in society. The IBCB, the CBI, the Government and indeed wider society can encourage and insist that this cultural and behavioural reform process continues, however only the banks themselves can deliver the change needed to demonstrate that they deserve the trust of their customers. Progress can only be maintained if behavioural and cultural change remains a central and strategic priority for the banks.

While the IBCB does not comment on the findings of any one individual investigation report from the CBI, we will issue a comprehensive overall statement once the CBI’s investigation process has been completed for all five of our member banks. Our work in the IBCB is ongoing and we will continue to strive for and facilitate tangible cultural change in the banking sector through a work programme focussed on working with our member banks to build trustworthiness.

_{1 €83.3m Allied Irish Banks p.l.c. (AIB) and €13.4m EBS d.a.c.
1 CBI fines to date: PTSB €21m, KBC in excess of €18m and Ulster Bank in excess of €37m in relation to tracker mortgage related failings 1 The Tracker Mortgage Examination – Final Report, July 2019, Central Bank of Ireland
1 €83.3m Allied Irish Banks p.l.c. (AIB) and €13.4m EBS d.a.c.
2 CBI fines to date: PTSB €21m, KCB in excess of €18m and Ulster Bank in excess of €37m in relation to tracker mortgage related failings 3 The Tracker Mortgage Examination – Final Report, July 2019, Central Bank of Ireland}

ENDS
For More Information:
Fiona Murphy, Edelman | T: +353 87 8194464 | E: fiona.murphy@edelman.com
Notes to Editor:

About the Irish Banking Culture Board

The Irish Banking Culture Board is an independent industry initiative established and funded by the five retail banks in Ireland (Allied Irish Banks, Bank of Ireland, KBC Bank Ireland, PTSB & Ulster Bank) with the purpose of working with their member banks to build trustworthiness in order to assist the industry in regaining public trust. The Board is independent with a non-banking majority, whose members are drawn from across Irish society. The role of the IBCB is to be an independent voice advocating for cultural change in the Irish banking industry. The IBCB is focused on culture and behavioural change in our member banks, in the knowledge that a changed culture will change outcomes. The IBCB is not a lobbying or representative organisation. It does not act as a regulatory body nor duplicate the work of individual banks, the BPFI or the regulator.
For more information www.irishbankingcultureboard.ie