Elderfield plans strict contact code for banks

BANKS are facing strict rules which will prevent them hassling borrowers struggling with general personal debts, the Financial Regulator announced.

Matthew Elderfield said changes were planned that would prevent banks phoning or contacting customers incessantly over debts such as car loans and credit card bills.

The clampdown on lenders pestering troubled customers comes after similar restrictions were introduced on banks contacting distressed mortgage holders.

Mr Elderfield told the Oireachtas Finance Committee that work was progressing on extending the mortgage related rules to cases of personal debt.

Under a code of conduct, banks are not allowed make more than three unsolicited calls a month to mortgage holders.

It is expected that the extended code for handling personal debt cases will be introduced early next year.

The regulator also said that he would not stand for any intimidation of customers by lenders.

Senator Aideen Hayden said that, despite current rules, one borrower had contacted her after a bank had called her about her mortgage every day for a month.

Mr Elderfield appealed for hassled borrowers to write to him personally and pledged to take action against lenders breaking the code of conduct.

“People write to me. Be very specific about the bank and the branch. We’ll treat the individual anonymously. And that will inform our onsite work and our supervision and we’ll put some pressure on the banks if that’s the case.”

TDs and senators were also told yesterday that bank loan books on residential mortgages amounted to over €10 billion.

Central Bank governor Patrick Honohan said the figure was difficult to calculate as some lenders were selling their mortgage loan books at discount prices to firms in Britain and the United States.

He also warned against the state providing a wide-scale mortgage relief scheme. “Society at large would not be well-served, to say the least, by strategic behaviour on the part of any persons that could service their debts but conceive, in the current environment, an opportunity to escape from their obligations, large or small.”

Government ministers have given mixed responses to calls for a state-supported debt-forgiveness scheme.

An inter-departmental group, which is set to report at the end of the month, will lay out proposals to alleviate borrowers which Finance Minister Michael Noonan has indicated will be considered and acted on almost immediately.


Padraic Halpin

ECONOMIC recovery will be moderate and export-led, generating relatively few jobs, but lenders have enough capital to deal with an “exceptional” rise in household mortgage arrears, Central Bank Governor Patrick Honohan has said.

Ireland has received a cautious vote of confidence from international investors as its bond yields on secondary markets fell below 9% from over 14% in mid-July on strong export data and concessions on the EU/IMF bailout package.

But weaknesses in the domestic economy have dealt a blow to the Government’s to emerge from a bailout by the end of 2013.

“The point has now been reached where the positive impulse to output growth from the external side is broadly offsetting and even beginning to outweigh the remaining drag on growth from domestic developments,” Mr Honohan said.

“The nature of the recovery will be moderate and growth will not be very labour intensive, however, especially in the initial stages.”

Mr Honohan said the fall in Irish bond yields showed confidence that the country was taking the right steps, but said the Government needed to give more detail on its plans to cut the deficit as this would reduce uncertainty.

“It is vitally important the targeted reduction of the deficit as a proportion of GDP is achieved on or even before schedule.”

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