Ulster Bank bosses told they “robbed” customers as RBS subsidiary admits tracker scandal delay

Finance Committee chair John McGuinness told the bank it was unwilling to understand the scale of the tracker overcharging and the impact of “stealing” good value trackers from customers, sixteen of whom lost their properties, 15 of which were family homes.

Mr McGuinness slammed the RBS subsidiary for sending chief finance officer Paul Stanley into the committee instead of Gerry Mallon, the departing chief executive whose next stop is the top job at Edinburgh-based Tesco Bank.

The committee was told Mr Mallon was working out his notice, an excuse Mr McGuinness rejected.

He said: “Mr Mallon is working out six months’ notice. He does not turn up. You have a brass neck like no other bank I have seen.”

The committee went on to grill bosses over their delay of several months in establishing a review into the tracker scandal.

Responding, Mr Stanley admitted that the bank took months before taking any action in response to a Central Bank letter in late 2015 which notified the bank that an industry-wide review was being established into the affair.

Mr Stanley told the committee that the bank’s delay in reacting – which took until March the following year - had added three months to its customers’ wait for redress and compensation.

“In hindsight, what we should have done was mobilise and have the deliberations concurrently,” he said. “By doing it the other way we added three months in to our programme that we could have avoided.”

Just under 3,500 affected customers have so far been identified by the lender as victims of the scam that the bank admitted had allowed it to pocket €100m in profits, but Ulster Bank was also criticised for lagging behind other banks in updating the Central Bank on the total number of its borrowers caught up in the scandal.

Of the 3,500 customers identified thus far, 1,214 have received redress and compensation totalling €24 million. The bank had made payments to 1,017 customers as of December 20, 2016.

However, Ulster Bank denied it broke the law by taking customers off low-cost tracker mortgages, saying that its legal advice was that it did not act contrary to legislation.

Mr Stanley said the tracker issue arose due to operational errors when the wrong interest rate was entered into its systems, there was ambiguity in mortgage documents, and consumer protection rights were not adhered to.

“The contractual view is that we did not break the law. That is the legal advice we get,” he said in reply to Sinn Féin’s Pearse Doherty. However, Mr Doherty questioned the truthfulness of the bank and said it had “robbed” its customers.

Mr Stanley also rejected claims that Ulster Bank was in dispute with the Central Bank over groups of customers that could potentially be due redress and compensation, but said that the regulator had asked it to review its policy in relation to some.

The bank’s CFO said he was unable to say whether the €211 million the bank has set aside to deal with the issue would be sufficient because it was in a close period before the release of its financial results this month.

He added that the bank had received legal advice indicating that it had not broken the law in relation to the scandal.