Financial advice service strikes deal with banks

A GOVERNMENT funded money advice service has beefed up negotiating powers with the banks so it can better help struggling borrowers reach new repayment terms with their lenders.

The Money Advice and Budgeting Service (MABS) has struck a deal with the Irish Banking Federation, which represents the country’s leading 12 credit institutions. The IBF has pledged to try and avoid taking legal action against people who cannot repay loans.

According to Anne-Maire O’Connor, business manager with MABS, while the new protocol has been in the pipeline for the past two years, in the current climate it is more relevant than ever.

“Our calls for help are increasing all the time, so this is very important now, and sets out ground rules between ourselves and the lending institutions,” she said.

“We would not have signed up to this if we did not think it was a strong document. It is pretty detailed and allows us to work in close partnership with the banks and consolidate the relationship we have already built up.”

Ms O’Connor said the reality was that a legal case could still be taken against defaulters, but for people willing to work with MABS, and the banks, there was more hope of a resolution.

“There are people who won’t pay and people who can’t. The banks are willing to work with those who can’t,” Ms O’Connor said.

Head of the IBF Pat Farrell said the protocol was “significant” as it gave priority to seeking workable solutions over legal proceedings.

“Creditors have an important role to play to ensure that not only do borrowers have the tools and advice they need during these very challenging times, but also to ensure that their door is always open to customers who may find themselves in financial difficulty.”

Fine Gael’s spokesperson on Social and Family Affairs Olwyn Enright welcomed the protocol but warned it does not provide cover for subprime institutions.

“These subprime mortgage holders have been hung out to dry by the financial sector and the Government.

Social Affairs Minister Mary Hanafin’s response was that subprime lenders have a “moral obligation” to sign up to the protocol.

“But given the voluntary nature of the protocol and the flimsiness of the statutory code on mortgage arrears, the lenders are likely to pay no attention to the minister,” Ms Enright said.