Paul Coghlan (Fine Gael) | Oireachtas source

I respect the authenticity and sincerity of Senator Mooney's call this morning regarding rates of interest being applied by the banks. I think we had a successful day yesterday at the hearings of the Joint Committee on Finance, Public Expenditure and Reform. We are all concerned at the gap between the ECB rates and the standard variable mortgage rates that are applicable. In this regard, I asked Mr. Duffy and his colleagues if they would be open to an independent objective assessment in circumstances where the rate they are applying is inflicting undue hardship on the borrower.I had in mind an external agency such as the Credit Review Office, which arbitrates on SME loan applications. To be fair, AIB said it would accept that proposition. It did not think it applies but it said it was trying to engage with everyone. In regard to the number of repossessions, it pointed out that when a notice was served, 50% chose to re-engage, so it has dropped all of those proceedings. From what it said yesterday, it is making a fair effort in that regard.

Yesterday, on the matter of repossessions, I also queried the practice on voluntary assisted sales and recommended that where the homeowner surrenders the house and assists in the disposal process, the bank would write off the balance of the debt once the asset has been sold. Again, that was accepted and it said that this is, or will be its practice. I know the Senator meant well and I agree with him but the bank did point out that there are four component parts to its charge for money and it is keeping them under review. There is movement and it is downward. The bank did seem to promise or commit, in the short term, perhaps within a few months, to reducing the rate.

Having an external agency to arbitrate could help, especially where a customer is able to show that, in its particular case, the bank is inflicting undue hardship. We need to continue to monitor the situation. Next week, Bank of Ireland and Ulster Bank will be before the finance committee and we will pursue this matter further with them as well. Things are going in the right direction. No one wants to see repossessions. As has been said by Senator Bacik, the Government will have its own suite of measures very quickly.