As the Deputy is aware, on 18 March the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their businesses and personal customers who were economically impacted by the Covid-19 crisis. These measures included flexible loan repayment arrangements, and included a loan payment break of up to three months which was subsequently extended for up to a six month period.
The financial circumstances of many of the borrowers that availed of a Covid-19 payment break have now normalised and they are in a position to return to making payments. In that regard, the BPFI has indicated that the broad options available to borrowers coming off a payment break will be to return to payments over the existing term of the loan, or to extend the term of the loan so as to make the monthly repayments more affordable for the borrower. It is important that lenders and borrowers coming off a payment break engage so as to select the most appropriate new repayment arrangement in their individual case.
Unfortunately, at the end of a payment beak there will be some borrowers who will continue to experience financial difficulty. In these circumstances, it will be particularly important that engagement should take place as early as possible. I would, therefore, encourage any borrower who feels he or she may have difficulty in resuming payments after a Covid-19 payment break to contact their lender and if possible to do so before the payment break end date. Borrowers have a suite of regulatory protections and lenders have specific obligations, under the Central Bank consumer protection framework, to support and work with borrowers in arrears or in pre-arrears. In particular, lenders are obliged to engage and work with co-operating borrowers to identify an appropriate and sustainable solution having regard to the particular circumstances of a case and that lenders should use the full suite of restructuring solutions available to them. In that regard, while the European Banking Authority has recently stated that it would not extend its 30 September closing date to qualify for a Covid-19 payment break, it has also made it clear that banks can continue to support their customers with an extended payment break after 30 September on a case by case basis with such loans classified according to the normal prudential framework.
I will make it clear, in my on-going engagement with individual banks and with the representatives of the banking industry, that banks should work with and pro-actively assist their customers who will still be experiencing difficulty at the end of a Covid-19 payment break and I will also work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection framework will be fully available to mortgage and other borrowers that will still need support following a Covid-19 payment break.
Notwithstanding this overall engagement, it is important to highlight that, as Minister for Finance, I cannot mandate or overrule the internal decision making processes in any individual bank, even one in which the State has a shareholding, including decisions in relation to Covid-19 payment breaks and the decisions individual banks may make at the end of a Covid-19 payment break. Decisions in this regard are the sole responsibility of the board and management of the banks which must be run on an independent and commercial basis. The independence of banks in which the State has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market. However, all banks, including those in which I have a shareholding interest, will have to fully comply with all the applicable Central Bank and other consumer protection requirements that apply to all Central Bank regulated banks and mortgage lenders.