Ireland one of only 10 EU Member States to offer payment breaks to mortgage customers
In a comprehensive statement issued today by Banking & Payments Federation (BPFI), BPFI Chief Executive Brian Hayes has stated “The Irish payment break moratoria including the accrual of interest is, always has been and remains fully in line with EBA Guidance.”
He said the compliance of the Irish moratoria has been confirmed by the Central Bank of Ireland (CBI) to the European Banking Authority, to the Oireachtas Committee and in a letter to the CEOs of all lenders published on 8 June*. “BPFI, together with industry have worked closely with the Central Bank of Ireland on the Payment Break and will continue to do so.”
Mr. Hayes today stressed that the industry Payment Break in Ireland remains as originally and consistently communicated to customers, in good faith, from the outset of the Covid-19 Payment Break announcement in mid-March.
Consistency and transparency with customers
Mr. Hayes said the industry wide payment breaks is one of the most wide-ranging private sector moratoria made available in Europe in terms of the scope of products included and its availability to all customers impacted by COVID 19. “Irish lenders moved rapidly in March to make the Payment Break available to any customer impacted by COVID 19 and adhered to long-established precedents on payment breaks and interest, precedents which were reinforced through EBA COVID 19 specific guidance on 2 April. Lenders have been consistent, transparent and upfront regarding the costs associated with such a break and this approach is in line with CBI supervisory expectations published on 8 June 2020”, he added.
Mr Hayes said: “The Payment Break is offered on the same conditions as Payment Breaks in the past, and we believe that it is important that we have fairness of treatment across the board for past, present and future customers wishing to avail of breaks.”
Ireland in line with Europe
Mr. Hayes said the approach by Irish lenders goes above and beyond the offering made in other European countries. According to the EBA, only 10 Member States offer moratorium to mortgage customers, of which Ireland is one. Moreover, the accrual of interest during the Payment Break is in line with other countries in Europe whose private banks have introduced payment breaks.
The BPFI CEO said:” There are two exceptions, Belgium, and Spain, where for a very specific, limited and legally defined cohort of customers interest does not accrue. Nonetheless, there are specific conditions attached to such concessions for those limited cohort of customers, while for other customers in those countries interest does actually accrue.”
Mr Hayes said: “Ireland was one of the first countries in Europe to offer payment breaks to customers unlike some major countries in Europe. The initiative is available for any customer impacted by COVID 19, including those that may be in arrears and applies to Personal, SME and Mortgage customers.
Mr Hayes refuted false allegations that the industry deliberately misinformed the Taoiseach during a meeting on 11 May on the accrued interest issue. He said that Irish lenders have been clear and upfront in outlining the type of payment breaks available to customers and how they would apply in line with EBA Guidance published on April 2nd.
Mr Hayes also rejected any claim that banks are profiteering from Covid-19 Payment Breaks. He said: “Retail banks in Ireland have already provided an extra €0.5 billion for future losses in their Q1 2020 updates. Retail banks in Ireland have provided more than 140,000 payment breaks for loans across various customer categories with mortgages accounting for 70,000 of these breaks comprising mortgage breaks. There is an acceptance that many people may not be able to meet their repayments in the months ahead and that there will be considerable losses to the banks”.
BPFI and its Members understand that some customers may experience financial difficulties and distress even when the Government Measures are lifted.,customers will remain the priority of the lenders, as has been the case from the very outset of the Payment Break offering in Mid-March.
We appreciate that many customers are under pressure and financial stress and where a customer requires, banks will work with customers on appropriate solutions in line with a customer’s individual circumstances when the payment break period ends.
*CBI Dear CEO Letter, 8 June 2020
Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
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