Banks fail to comply with mortgage arrears guidelines

A new report shows some banks have pushed on with legal action against struggling homeowners, even after they have agreed a repayment schedule.

The finding comes from a new Central Bank investigation into how people who fall into arrears are treated by mortgage lenders.

The report, which covered seven anonymous lenders, found that some banks continued to make direct calls to customers, even when the mortgage holder had appointed a third party to handle the issue.

Some mortgage lenders also continued to look for extra payments, on top of an agreed repayment schedule.

The report said those practices "are contrary to the letter and spirit of the CCMA and which the Central Bank has instructed the relevant lenders to cease immediately."

"We expected a high level of compliance when you're carrying out this inspection, because these lenders are dealing with borrowers in a difficult situation," said Bernard Sheridan, director of Consumer Protection at the Central Bank.

"Our tolerance level for these weaknesses is very low."

He said the Central Bank would be following up the inspection with a set of actions for the lenders to take - but could not, legally, name the lenders involved. However, the Central Bank said its review covered 80% of the market and all the main lenders.

Despite the report making several findings that are critical of banks, the Irish Mortgage Holders Association said the Central Bank should not be responsible for monitoring lenders.

Chief Executive David Hall said the institution is too closely associated with commercial banks.

"We have a regulator who regulates banks, also cast on a statutory basis with protecting consumers in relation to banks' behaviour.

"Those two simply don't mix," he said.

He called for the consumer protection responsibility to be stripped from the Central Bank and handed off to an independent authority.