Financial Regulator Updates Code Of Conduct For Irish Banks

by Robert Lee, Tax-News.com, London

17 February 2009

The Irish Minister for Finance, Mr. Brian Lenihan, has in a statement welcomed the announcement by the Financial Regulator of the establishment of the mandatory Code of Conduct for Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises.

This new mandatory Code of Conduct for Mortgage Arrears builds on the existing voluntary Code of Practice issued by the Irish Banking Federation, explained Lenihan, and incorporates a requirement for the lender to wait at least six months from the time arrears arise before taking legal action. The Minister noted that Allied Irish Bank and Bank of Ireland had also agreed, as part of the recapitalisation announced on February 11, not to commence court proceedings for repossession of a principal private residence until after twelve months of arrears, where the customer continues to cooperate reasonably and honestly with the bank.

The minister also sought to quash media speculation about wide-scale repossessions, stating that mainstream mortgage lenders have been going to great lengths to avoid repossessions.

The Minister for Finance also pointed out that the government has measures in place to assist those who get into difficulties with their mortgages:

“The Mortgage Interest Scheme under the Supplementary Welfare Allowance system provides a safety net for those who need financial support with meeting the interest costs on their mortgage. Funding for the Scheme has been substantially increased and the Scheme will be reviewed in 2009.”

“In addition, the Money Advice Budgeting Service (MABS) provides valuable help to those in difficulty,” stated Lenihan.

Turning to discuss the Code of Conduct for Business Lending to Small and Medium Enterprises, he noted the code would apply to all regulated banks and building societies, and that the code will facilitate access to credit, promote fairness and transparency, and ensure that banks will assist borrowers in meeting their obligations, or otherwise deal with an arrears situation in an orderly and appropriate manner.

The business lending code includes a requirement for banks to offer their business customers annual review meetings, to inform customers of the basis for decisions made and to have written procedures for the proper handling of complaints. Where a customer gets into difficulty the banks will give the customer reasonable time and seek to agree an approach to resolve problems and to provide appropriate advice.

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