As the Deputy will be aware, regulated entities have introduced three-month payment moratoria on mortgages, and personal and business loans for business and personal customers affected by COVID-19. Regulated entities will now make available a further three-month extension to the current payment moratoria to customers that continue to be directly impacted by the fallout from the Covid-19 pandemic. I have been advised by the Central Bank of Ireland (the Central Bank) that it continues to engage with the Banking and Payments Federation Ireland (BPFI) and with firms themselves to ensure the effective implementation of these payment breaks. Credit unions are also supporting requests from their members, on a case-by-case basis.
The Central Bank expects all regulated entities to take a consumer-focused approach and to act in their customers’ best interests. Any customer facing potential difficulties in making loan repayments as a result of COVID-19, is advised to contact their bank, credit union or credit servicer as early as possible. The existing protections of the consumer protection framework continue to apply as appropriate.
The Central Bank’s consumer protection framework seeks to ensure that regulated entities are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle. Provision 3.1 of the Consumer Protection Code 2012 (the CPC) requires that where a regulated entity has identified that a personal consumer is a vulnerable consumer, the regulated entity must ensure that the vulnerable consumer is provided with such reasonable arrangements and/or assistance that may be necessary to facilitate him or her in his or her dealings with the regulated entity. This includes particular vulnerabilities that may arise as a result of the impact of COVID-19, for example, illness or loss of income.
Provision 2.6 of the CPC requires that regulated entities must make full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer. As such, where a payment moratorium is offered in respect of the Covid-19 situation, the Central Bank expects that firms will make clear to the borrower how the moratorium works, the impact of the moratorium on the overall cost of the mortgage and future repayments, as well as how the borrower will be treated when the arrangement ends.
If a payment moratorium has been mutually agreed between the borrower and the lender, then the loan will not be considered to be in arrears in respect of payments not made over the duration of the agreed payment moratorium.
The Central Bank is acutely aware that dealing with the challenges of COVID-19 will require a co-ordinated effort across the public and private sectors. First and foremost, COVID-19 is a global public health emergency, so the front line of Ireland’s response comprises of the exceptional efforts of Ireland’s health professionals. But it is also clear that COVID-19 is disrupting economic activity, both internationally and in Ireland, with adverse implications for the financial position of households and businesses in the near term.
In line with the Central Bank's mission to serve the public interest by safeguarding stability and ensuring that the financial system is operating in the best interests of consumers and the wider economy, the Central Bank expects firms to take a consumer-focused approach at this worrying time for some of its customers.
European Central Bank (ECB) and European Banking Authority (EBA) guidelines prescribe the conditions under which a loan is considered to be non-performing for banks. Lenders are also obliged to comply with relevant accounting standards. A number of recent statements from the ECB and the EBA clarifies a number of aspects of the prudential framework to provide clarity to the EU Banking sector. Where flexibility is provided for within the various obligations, the Central Bank will consider the application of this within the broader European framework.
The Central Banks has stated that where the Central Credit Register (CCR) is concerned, lenders obligations continue under the Credit Reporting Act 2013 to submit accurate information, and to enquire on the CCR when considering loan applications for €2,000 or more. Lenders may also enquire on the CCR when considering a loan for less than €2,000; if a borrower has requested a restructure on an existing loan; if there are arrears on an existing loan or if there has been a breach of the limit of a credit card or overdraft. Borrowers can request their credit report at any time, free of charge (subject to fair usage), at centralcreditregister.ie.
The CCR produces credit reports for lenders and borrowers on request. The CCR does not produce a credit score; it simply records the information that is submitted by lenders on a monthly basis. It is factual impartial information. The CCR does not decide if a loan is approved, the lender does.
Any payment arrangements (including payment breaks agreed between a borrower and their lender) are a matter for discussion between these two parties. Lenders must ensure that they accurately reflect changes to a borrower’s repayment terms, in the data submitted to the CCR in accordance with the guidance issued by the Central Bank. When a lender agrees a payment break with a borrower, the lender should not report this to the CCR as being “missed” or “past due” or the loan as being “restructured” during the period of the payment break.
Borrowers may also avail of the option to place an explanatory statement on their credit report in connection with any of their information on their credit report. So for example, if a borrower found themselves in arrears on a loan, they could use this option to explain the circumstances, if they wish.
