Written answers

Thursday, 26 November 2020

Department of Finance

Covid-19 Pandemic Supports

Photo of Mairead FarrellMairead Farrell (Galway West, Sinn Fein)
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198. To ask the Minister for Finance the reason he did not apply for the extension of Covid-19 payment breaks for borrowers by the deadline of 23 September 2020. [28277/20]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, on 18 March last the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. This was a welcome voluntary initiative that allowed necessary relief to be quickly and efficiently provided to borrowers.

The European Banking Authority (EBA) also introduced COVID-19 guidelines in the spring with the objective of setting out the requirements for the public and private moratoria introduced across the European Union which, if fulfilled, would help avoid the classification of exposures as forborne or defaulted under distressed restructuring. One of the conditions for moratoria to be compliant with the EBA guidelines was that each individual payment break had to be approved before 30 September 2020, and on 21 September the EBA announced that it would not extend this deadline. I would like to clarify for the Deputy’s information that there was no requirement or deadline by which I, as Minister for Finance, had to apply for an extension of Covid-19 payment breaks.

The Deputy may nevertheless wish to note that, in its statement, the EBA indicated that banks can continue supporting their customers with extended payment moratoria after 30 September 2020, with such loans classified on a case-by-case basis according to the usual prudential framework.

It is recognised that many borrowers continue to be impacted by the economic consequences of Covid-19, and they may not be in a position to resume their loan repayment commitments when their payment break ends or may now be in difficulty for the first time. I am fully aware of the stress and uncertainty that these borrowers are facing, and they will continue to need assistance and support from their lenders. Borrowers have a suite of regulatory protections, such as the Central Bank's Code of Conduct on Mortgage Arrears, and lenders have specific obligations to support and work with borrowers who are continuing to experience mortgage or other loan difficulty because of Covid-19. These options could include additional flexibility, and this could be a short term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements.

I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection framework will be fully available to mortgage and other borrowers that will still need support due to the economic impact of Covid-19. The Central Bank has also confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. Indeed, the Deputy may wish to note that the Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements and Central Bank expectations.

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