The Central Bank Governor has said the tracker mortgage scandal has had a negative impact on public trust and confidence in the banks, which were already fragile in the aftermath of the economic crisis.
Professor Philip Lane made his comments at the Institute for International and European Affairs in Dublin.
The Professor said it was clear from the Tracker Mortgage Examination that customer interests were not "sufficiently protected or prioritised by our lending institutions".
The Central Bank will give an update on the progress of its examination in April, he added.
He said the probe has raised serious questions about the culture in the banks and the extent to which senior bank managers are really living up to their promises of putting the customer at the heart of their business.
He said the Central Bank is undertaking behaviour and culture assessments of each of the five main lenders - AIB, Bank of Ireland, Ulster Bank, PTSB and KBC Bank Ireland.
It will report the findings to the Minister for Finance in June.
On the housing market, Professor Lane said that house prices have moved broadly in line with fundamentals, but he cautioned that "buying a house is certainly not a one-way bet.
While there has been progress in recent years in reducing the stock of non-performing loans across the banks - both in Ireland and across the euro area - Professor Lane said that significant challenges remain.
He said that banks can resolve NPLs in several ways, including workouts, restructures, foreclosures and sales, adding that the Central Bank does not have a preference for any particular solution.
"Banks are required to define their own NPL reduction strategies and choose the most suitable solution for each relevant portfolio. It is up to banks to define realistic but ambitious timeframes and appropriate options for each portfolio," he said.
Professor Lane said the sale of loan portfolios is one option available to banks.
He said that in cases where banks choose to sell their loans portfolios, the Central Bank's position is that the protections travel with the loans and that borrowers are protected in accordance with the consumer protection framework.
"Under the Credit Servicing Act, if an unregulated entity buys loans from an original lender, then the loans must be serviced by a 'credit servicing firm' that is authorised and regulated by the Central Bank," he stressed.
The Governor also told the IIEA the Irish economy continues to perform well, based on a broad recovery in domestic demand and a strong external environment.
He said, however, that risks to the economy are increasing due to global concerns about the international trading and taxation systems as well as Brexit.
"Unexpected events can trigger upside or downside revisions to our forecasts, especially in relation to the longer-term path for the economy.
"It follows that public and private decision makers should ensure that choices are robust to unanticipated outcomes, rather than putting an excessive and unrealistic reliance on our central projections," Professor Lane said.
Governor Lane also stressed the importance of having an appropriate fiscal strategy for Ireland.
He said the risks facing the economy call for "a prudent approach that recognises the importance of building fiscal buffers during good times in order to enable more vigourous counter-cyclical fiscal interventions in the event of a future economic downturn."
He also said that as the economy gets closer to full employment, wages should rise at a faster pace.