As 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 Schemes introduced as part of the Government’s response to Covid-19 have been some of the main tools with which we have protected the income of employees who otherwise would not be working. However, whilst I acknowledge the seriousness of the situation for some mortgage applicants, what I cannot do is mandate what information is required by regulators and lenders to complete lending sustainability evaluations.
The Employment Wage Subsidy Scheme (EWSS) is an economy wide scheme open to all sectors, as was the case for the Temporary Wage Subsidy Scheme (TWSS) before it. Unlike the TWSS however, which was an income support to the employee paid via the employer, the EWSS is a subsidy to the employer, delivering a per-head subsidy on a flat rate basis. Up to €350 may be claimed by the employer retrospectively for every worker who is paid between €151.50 and €1,462 per week.
The position in relation to the EWSS does not affect any legal obligations that the employer may have to their employee as regards any terms, conditions or entitlements of their employment, including pay and hours worked. A list of employers who have availed of the EWSS will ultimately be published.
It is important to highlight that, 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. Furthermore I am specifically precluded from intervening in the case of any individual customer with 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.
Notwithstanding this, officials in my Department requested a comment from Bank of Ireland on the matter you have raised and received the following:
“At Bank of Ireland we are very conscious of the potential impact of COVID-19 on income levels and we assess each application carefully taking individual customer circumstances into consideration. Where customers are progressing mortgage applications and have affordability to do so, the Bank continues to support those applications.
“Where income has changed or where we are aware of potential challenges to a customer’s income as a result of COVID-19, we are liaising with customers to understand their circumstances and assess if these are expected to change again in the future. This process has always been followed as it wouldn’t be responsible to provide somebody with a mortgage at a level that they may struggle to afford now or in the future.
“We engage closely with our mortgage applicants on an ongoing basis to ensure we fully understand their circumstances. As part of this engagement we ask employers to confirm if their employee’s income is supported by a Government scheme due to COVID-19. The Bank does not seek any information about financial support that may be provided to the employer.”
