Written answers

Tuesday, 15 June 2021

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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406. To ask the Minister for Finance the extent to which he remains satisfied that lenders continue to engage with borrowers who have fallen into arrears for reasons outside of their control; if amicable resolutions continue to be found; and if he will make a statement on the matter. [32088/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Government and the Central Bank expects that lenders will continue to engage effectively and sympathetically with distressed borrowers to deliver appropriate and sustainable solutions and to treat borrowers at all times, including in response to COVID-19, in line with Central Bank’s robust consumer protection framework, specifically the Code of Conduct on Mortgage Arrears, the Consumer Protection Code and the Regulations for Lending to SMEs.

The Central Bank has advised that it is satisfied that lenders are engaging with distressed borrowers in a proactive way in order to resolve those borrowers’ financial difficulties. Where mortgage borrowers are in financial distress, lenders must follow the Central Bank of Ireland’s Code of Conduct on Mortgage Arrears (CCMA) which aims to help borrowers address their financial payment difficulties with their lender quickly and effectively and get borrowers back on track with their mortgage obligations. The CCMA indicates that all such arrears or pre-arrears cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her mortgage obligations.

In relation to business customers and SME’s that are in financial distress, lenders must follow the Central Bank of Ireland’s Small and Medium Enterprise Regulations. These Regulations place an obligation on lenders to assess each business’ financial circumstances with the objective being to assist that business to resolve its financial difficulties quickly and effectively, and to get the business back on track with its repayment obligations.

Given the significant impact that Covid-19 has had on some businesses, the Central Bank has made clear to lenders (through its supervisory engagement) that it is critical for them to ensure there is efficient and targeted restructuring of SME liabilities in the near term, in order to ensure that viable businesses are supported and are placed on a sustainable footing. The Central Bank has advised that it has engaged with lenders to ensure they have strategies and plans for supporting viable SME borrowers that are experiencing short-term financial difficulty.

The Central Bank has also emphasised the importance of borrowers engaging proactively with their lender noting that if a borrower is struggling to repay their debts due to COVID-19 or any other reason, the borrower should talk to their lender as soon as possible to find a sustainable solution and to retain access to protections some of which only apply if the borrower engages with their lender.

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