A key focus of the Central Bank is to ensure lenders are acting in a way that protects the best interests of borrowers, and in line with relevant codes and regulations. Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress. The main objective being that impacted borrowers are provided with the appropriate supports by their lenders.
The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers – in line with the Code of Conduct on Mortgage Arrears (CCMA), the Consumer Protection Code – to deliver appropriate and sustainable solutions and facilitate as many borrowers as possible to return to repaying their debt. In particular, the CCMA sets out the process that entities must follow when a borrower is in or facing difficulties on a primary home mortgage.
This Mortgage Arrears Resolution Process (MARP) as set out in the CCMA comprises four steps which are:-
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution.
The CCMA must be complied with as a matter of law and the Central Bank has the power to take enforcement action against any regulated entity who does not act in compliance with the CCMA. Under Provision 38 of the CCMA, it is acceptable to put in place temporary alternative repayment arrangements prior to completion of the full assessment of the borrower’s Standard Financial Statement (SFS), where a delay will further exacerbate borrower’s arrears or pre-arrears situation.
It is in the best long term interest of borrowers and lenders that the most appropriate and suitable arrangement is put in place in context of a particular situation, and this can only be done where there is engagement between the borrower and lender. Payment breaks continue to be available as part of a suite of measures lenders offer to customers facing difficulties and the Central Bank has confirmed that there is no regulatory impediment to lenders providing payment breaks so long as they are appropriate in the borrower’s circumstances. However, if following engagement it is concluded that another solution is better, then it is in everyone’s interest to adopt that better option as soon as possible.
As indicated, the Central Bank is continuing to engage on this matter and it recently indicated that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements and Central Bank expectations.
I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.