Mortgage arrears customers not getting adequate protection from Central Bank

Central Bank does not know how many mortgage arrears customers have had to move from tracker to variable mortgages

Fine Gael TD for Cork South West, Jim Daly, has called on the Central Bank to utilise the power at its disposal to monitor how banks are treating customers in mortgage arrears. This comes after the Central Bank confirmed to Deputy Daly that it does not know how many mortgage arrears customers have switched from tracker to variable mortgages as a result of their arrears process. The Central Bank has also not commenced on the spot checks on banks’ treatment of mortgage customers even though these powers have been in place for over a year under the mortgage arrears code.

“I am extremely concerned that the Central Bank is not aware of the number of people in mortgage arrears who have been moved from tracker to variable mortgages as a result of their ongoing negotiations with the banks. Tracker rates can be as low as 1.15 per cent compared to the standard 4.5 per cent variable rate. In real terms this can mean an overall difference in payments of tens of thousands of euro over the course of a mortgage.

“I wrote directly to the Governor of the Central Bank about this matter and was astounded by the response I received which I felt represented a shirking of the Central Bank’s responsibility to monitor and regulate the Banks.

“The Governor acknowledged to me in writing that, ‘the Central Bank’s statutory codes require lenders to act in the best interest of their customers and to make a full disclosure of relevant material and information in a manner which seeks to inform their customers.’ Noting this statutory requirement, it is unacceptable in my view that the Central Bank is not in receipt of the most pertinent form of data which would immediately demonstrate any lack of regulation for customers of tracker mortgages.

“Has the Central Bank not learned anything from the past decade and who exactly is the Central Bank protecting, the lenders or the borrowers? We know that the banks will look after their own interests. It is clear to me that the Central Bank needs to take a more hands on role in ensuring that the interests of mortgage holders are protected.

“While I am delighted to learn that the main banks are now moving into profitability, I would be hugely concerned if this was being achieved by fleecing ordinary working families who are being moved off trackers to variable rates, which could see an overall increase in their repayments to the tune of tens of thousands of euro.”