Banks ‘should cover troubled owners’ costs’
Noeline Blackwell, director general of the Free Legal Advice Centres, said it was “most distressing” that there was no bank or state-funded legal or financial advice available to thousands of homeowners potentially facing repossession.
She said while some were entitled to free legal aid from the state-funded Legal Aid Board, only two of the board’s centres had waiting times for an appointment of fewer than four months and some had waiting times of more than a year.
While the Money Advice and Budgeting Service (Mabs) could give financial advice, Flac did not believe it was structured or resourced to provide a mortgage advice and support service.
Ms Blackwell said both of the agencies were “at the pin of their collar” and the situation would worsen when repossession rates increase, as is likely under upcoming legislation, and with the roll out of the requirements on lenders to meet Mortgage Arrears Resolution Targets set by the Central Bank.
Flac’s recommendation that banks cover reasonable financial and legal fees for borrowers who engage in negotiation to reach a sustainable arrangement is contained in a submission made today to the Central Bank around the review of the code of conduct on mortgage arrears.
As part of its submission, Flac is also asking that the new code:
nNot permit, as is being proposed, more than three unsolicited communications between lender and borrower per month.
Flac said there needed to be consequences for aggressive conduct and if the Central Bank was “intent on removing limits on communications” then it should commit itself to “regularly monitoring by inspections the action of lenders”.
Flac said the code should also explicitly allow for a borrower to make a complaint to the consumer protection section of the Central Bank if the lender exceeded its authority in terms of communications;
nThat the code be made statutory. Flac said distressed homeowners would then “at least have a code that lenders would have to follow to the letter” giving borrowers “a real chance of demonstrating their ability to service a sustainable alternative arrangement on their mortgage that would keep them in their homes”. Failure to treat the borrower fairly could then be challenged in the courts, Flac said.
Ms Blackwell urged members of the public to use the opportunity to make a submission on the review of what she said was a “very important tool governing how lenders deal with borrowers in arrears with the mortgage on their home”.
Today is the final day for submissions for the code of conduct review.
