Professor Philip Lane:

Collectively, not just in terms of consumer protection but economically, it makes sense to limit the number of repossessions. Repossessions are very costly. In the US, where repossession happens much more quickly and is much more widespread, there is a major social and economic cost. Under the CCMA, repossession is a last resort. There have been more than 120,000 restructures and 14,000 cases are before the courts. While we agree with the objective that repossession should be the last resort, it has to be a resort in a case in which there is no meaningful engagement and no sustainable restructuring is possible. The underlying set up of a mortgage is that a failure to maintain payments, absent any restructuring, ultimately ends up in repossession. This has to be part of any functioning mortgage system.

There was a major systemic crash whereby every individual who bought ended up in this situation. It was an accident of timing that these people were in the demographic group that was buying houses at a certain point in time. Given that the banks have faced a very common business model and have very common strategies, they have ended up in very similar situations. This goes back to ensuring we manage these systemic risk factors in the future. When it becomes systemic, it becomes awful.

From the Central Bank's perspective, systemic risk is at the core of our macro-prudential policies. At the individual level, the consumer protection policies are in place. The issue about arrears, restructuring and repossession has both those dimensions - consumer protection and financial stability. We do not prioritise these. The two mandates are not in conflict and we pursue both mandates as best we can.