Central Bank publishes Review of Early Mortgage Arrears Supports

The Central Bank of Ireland has completed a review of the support banks, retail credit firms and credit servicing firms provide for borrowers in or facing early arrears.

While solutions are being found for borrowers, the review identified areas for improvement in how firms provide information as well as how they engage and support customers through the mortgage resolution process.

Director of Consumer Protection, Colm Kincaid said “The Central Bank has carried out this review to ensure the financial system is supporting borrowers in or facing early arrears on their mortgage. It comes as we see an increased number of borrowers falling into early arrears, as increased costs of living impact borrowers’ finances.

“The review found that where there is engagement between lender and borrower under the Code of Conduct on Mortgage Arrears, solutions are being found to support borrowers. It also found that firms have made improvements to their processes and supports. I encourage any borrower in or facing any financial difficulty to engage with their mortgage provider. They are required to support you and seek a solution that is affordable and aims to keep you in your home. Information on what you can expect from your mortgage provider is available on the Central Bank’s Consumer Hub.

“However, the review also found that the quality of customer service is not yet where it needs to be in the context of the specific challenges for borrowers facing early arrears at this time.  We found instances of late and incomplete information provided by lenders; unclear website information; inadequate follow-up with the borrower; lack of assistance in completing paperwork; and failures to recognise where borrowers were experiencing financial difficulties.

“We have set out to the firms we regulate the improvements they need to make. As well as dealing with the deficiencies we identified, we have also called out examples of good practice we witnessed in firms’ websites; their use of Plain English paperwork and prepaid return envelopes; incentives for borrowers and crucially, staff demonstrating empathy and willingness to accommodate borrowers through particularly difficult situations such as bereavement.

It is critical that firms make these improvements to meet their responsibilities to support consumers in or facing mortgage arrears and avoid the risk of those arrears becoming longer term. This needs to be a priority for all firms.”

The Central Bank has also encouraged firms to make greater use of temporary Alternative Repayment Arrangements (ARAs) to support borrowers where there is a risk that their situation will get worse during the time needed to gather information and assess the situation. The Review found minimal usage of these types of temporary ARAs in the majority of firms, and it was not always clear in firms’ policies what circumstances exactly provide for their use.

(Source: Central Bank of Ireland)

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