Dáil Éireann Debate, Tuesday - 30 June 2020
46. Deputy Fergus O'Dowd asked the Minister for Finance if he will address concerns raised by a person (details supplied) in relation to their mortgage application and the subsequent knock-on effects of being placed on the temporary wage subsidy scheme; and if he will make a statement on the matter. [12994/20]
Amharc ar fhreagraAs you will be aware both officials and myself have engaged and will continue to engage extensively with the Banking and Payments Federation (BPFI) and the banks directly in relation to supports for personal and business customers affected by the COVID-19 crisis. Officials in my Department are alert to issues raised directly by the public and these inform the Department’s ongoing engagement process and policy formation.
The Wage Subsidy Scheme is one of the main tools with which we are protecting the income of employees who otherwise would not be working and it is hoped that it will be a major boost in saving the businesses for which they work. As of 18 June 551,800 employees have received a subsidy since the start of the Scheme, 232,400 employees received a subsidy in the previous week and an estimated 410,000 employees were being supported by the Scheme having received a subsidy in their most recent pay period.
Whilst I completely acknowledge the seriousness of the issue you have raised and its impact on those affected, what I cannot do is mandate how temporary payments received under the Wage Subsidy Scheme are treated in lending sustainability evaluations by regulators and lenders.
The banking crisis we faced over ten years ago was fuelled by unsustainable lending. There are now thankfully far firmer regulatory controls and restrictions on lenders. Speaking on this particular issue, on 7 May the Governor of the Central Bank publicly noted that if an individual borrower’s circumstances have changed such that doubt is cast over the sustainability of potential borrowing, it is in the best interests of the borrower and the bank if the situation is reviewed.
Furthermore as Minister for Finance I cannot mandate or overrule the internal risk assessment processes in any bank, even one in which the State has a shareholding. 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.
In relation to AIB, officials in the Department received the following advice from AIB Group:
“AIB is actively engaging with all customers who have applied for a mortgage with the bank. We are closely monitoring the impact of Covid-19 on our customers. AIB is required to complete a responsible and prudent assessment of all applications from the borrower’s and the lender’s perspective.
“Existing mortgage approvals (Approval in Principle – AIPs) are unaffected by Covid-19 (amount/rate/term etc.).
“When customers wish to progress to the loan offer stage, we are obliged to understand their current financial circumstances, as our primary concern is to do what is right for our customers, in the short and long term".
“Where a customer has been adversely impacted by Covid-19, and there are concerns about their longer term income to service the mortgage, it may not be in the customer’s best interest to proceed with the application at this time. The bank will engage with those customers individually over the coming months and deal with each one on a case by case basis.”
