Tá bainc na tíre seo ag iarraidh na mílte euro de bhreis úis as a gcuid custaiméirí atá ag baint tairbhe as sos íocaíochta mar gheall ar Covid-19. Caithfí deireadh a chur leis seo agus caithfidh an Rialtas seasamh suas i gcoinne na mbanc agus cinntiú a dhéanamh de nach dtarlóidh seo níos mó. On 11 May, the current Tánaiste, the Minister for Finance and the then Minister for Business, Enterprise and Innovation held a meeting with the chief executives of the five main retail banks here, along with Mr. Brian Hayes, chief executive officer of the Banking & Payments Federation Ireland. At the meeting the matter was raised of additional interest being charged arising from mortgage payment breaks.
As the Tánaiste is well aware, on 18 March, the banking sector, along with the Minister for Finance, announced measures in response to Covid-19. Among them was a payment break option that could benefit customers who suffered income loss because of Covid-19. Under this measure, financially vulnerable customers could avail of a break, with no repayments due on either principal or interest for up to six months, with the repayments in question spread over the remainder of the term or the term extended by the length of the payment break.
This will come at a significant cost to the consumer. It is a Covid penalty. It is something I raised in the Dáil on 26 March, more than three months ago, and many times since. All 80,000 customers who have taken this payment break on their mortgages because of Covid-19 will face higher repayments and debts as a result. During the break, interest will continue to accrue and it will be recapitalised thereafter. This will hit some families harder than others.
We can take Permanent TSB as an example, a State-owned bank in which we have a 75% shareholding. Someone with a €250,000 mortgage with 30 years remaining on the term and who takes a six-month break will face an additional cost of more than €6,200. This means the customer will repay all the capital, as per the contract, all the interest and then be hit by a Covid penalty of €6,200. That is an example of a State-owned bank increasing the debt of an already financially vulnerable household.
This matter was raised at the meeting of 11 May, which I know because I have seen the minutes. At the meeting, the chief executive officer of Bank of Ireland claimed the charging of interest during these payment breaks was required by the regulator. The chief executive officer of AIB, in which the State is a majority shareholder, claimed that if interest was not charged, loans would go into default. Neither of these claims is true. No regulator required the banks to charge additional interest on mortgage breaks taken because of Covid-19.
The European Banking Authority, EBA, guidelines published in April indicate it is acceptable for payment breaks to be given without interest being charged. This is what allowed the Spanish Government to adopt legislation in March that would let those impacted by Covid-19 avail of a mortgage payment break on a primary residence without interest accruing. It is what allowed the Belgian Government and banks to adopt measures to ensure no interest would accrue for low-income borrowers availing of a mortgage break. KBC Bank has implemented such a process in Belgium for those customers.
How does the Tánaiste respond to the fact that he and other senior Ministers were misinformed by the retail banks and the Banking & Payments Federation Ireland on 11 May? Most important, what is the Government now going to do? Is it going to act and stop the overcharging of interest on these vulnerable 80,000 customers?