‘Lenders must be clear with customers on how payment breaks work and ensure all consumer protection obligations are met in full’ – Director General, Derville Rowland

• Central Bank has been engaging closely with industry on payment breaks – which provide households and borrowers vital breathing space.
• Some borrowers may continue to experience difficulties when payment breaks expire. In those cases, the Central Bank expects lenders to ensure appropriate solutions, including forbearance, are available.
• The Covid crisis will not change Central Bank’s focus on holding regulated firms and the people who run them accountable.

Speaking at an online ACOI event, Director General, Financial Conduct, Derville Rowland, discussed the actions taken by the Central Bank in recent months in response to the ongoing Covid crisis, with a particular focus on consumer and investor protection measures.

She noted that the Central Bank continues to focus on promoting the welfare of the people of Ireland as a whole. “All of our actions have been aimed at ensuring the financial system absorbs the shock, is better placed to support households and businesses through the crisis, and that consumers and investors are protected in line with our mandate. The stability of the system, and the resilience of firms within it, are as essential in protecting consumers and investors as our statutory codes of conduct, assertive supervision and robust enforcement powers. In short, consumer and investor protection is embedded in every area of our work,” she said.

In relation to payment breaks, she said: “We have set out our expectation to industry that at the end of the agreed payment break, customers should be given the option to either repay the loan within the remaining term or extend the term of the loan by the length of the payment break. This choice should apply for all loans, including mortgages, and the impact of both options on the overall cost of credit and monthly repayments should be fully explained to the customer. Customers should also be allowed to make reduced payments during the payment break where they wish to do so.”

Some borrowers may continue to experience difficulties when their payment breaks expire. In such cases, the Central Bank expects lenders to ensure appropriate solutions, including forbearance, are available.

She added: “We expect lenders to engage with borrowers well in advance of the expiry of the payment break to support customers, and our existing arrears handling frameworks, including the statutory Code of Conduct on Mortgage Arrears (CCMA), will apply in the normal manner. Those frameworks are designed to protect the interests of borrowers, particularly in times where they are experience financial difficulties because of illness or loss of income. They require all lenders to engage sympathetically and positively with the customers, with the objective at all times of supporting them through this time. We are assertively supervising this process to ensure our expectations are being met,” she said.

In concluding, she referenced the Central Bank’s enforcement approach - “While we have certainly had to re-prioritise in light of Covid, one thing that will not change is our focus on holding regulated firms and the people who run them accountable where there are serious or significant breaches of regulatory requirements and standards. The crisis cannot give regulated firms a waiver from meeting their obligations aimed at protecting consumers and investors”