Central Bank expects lenders to engage constructively with borrowers who are experiencing financial difficulty as a result of COVID-19 – Director General, Derville Rowland

• Lenders have clear guidance on how they must treat borrowers who continue to struggle with payments.
• Suite of consumer protections, including the CCMA, remains in place.
• Solutions offered must be appropriate and sustainable for the borrower’s individual circumstances.

The Central Bank of Ireland’s Director General, Financial Conduct Derville Rowland today (30 September 2020) addressed the Autumn Seminar of the Money Advice and Budgeting Service (MABS). The Director General’s speech addressed the role of the Central Bank in the national consumer protection framework and its current priorities in light of the ongoing impact of COVID-19.

Ms Rowland explained the Central Bank works at a systemic level to ensure that the financial system can provide services that households and business require, both in good times and in bad, and that they do so fairly.¹

“Consumer and investor protection is embedded in every area of our work. The stability of the system, and the resilience of firms within it, are as essential in protecting consumers and investors as our statutory codes of conduct, assertive supervision and robust enforcement powers. The breadth of our mandate enables us to harness our collective wide-ranging policy, economic, financial stability and regulatory expertise in working to protect consumers.”

Ms Rowland detailed the component parts of financial conduct regulation – setting rules, supervising firms’ compliance with them, and taking enforcement action where serious or significant breaches occur.

“Firms are responsible for selling their customers products that meet their needs both now and into the future. There is, therefore, an onus on firms to have effective cultures and set the right standards. Many firms meet those standards and put their expertise to good use for their customers. But others, of course, don’t. And so conscious of the devastating consequences that misconduct can have, the Central Bank regulates financial conduct with the aim of ensuring that the best interests of consumers and investors are protected and that markets operate in a fair, orderly and transparent manner.”

Ms Rowland also highlighted how the Central Bank works with other elements of the national consumer protection framework, ranging from organisations such as MABS to the Financial Services and Pensions Ombudsman.

On the issue of distressed debt, Ms Rowland said that as system-wide payment breaks come to an end over the coming months, the full suite of existing consumer protections remain in place and lenders have clear guidance on how they must treat borrowers in difficulty.

“Some borrowers may continue to experience difficulties in returning to loan repayments and require individually tailored supports. In those cases, the Central Bank expects lenders to engage constructively with their customers to ensure appropriate solutions - which can include further forbearance if appropriate to the borrower circumstance - are available. Our existing arrears handling frameworks, including the Code of Conduct on Mortgage Arrears (CCMA), will apply in the normal manner.

“For some borrowers temporary additional supports may be the answer initially, while for others the more appropriate and sustainable option will be deeper restructuring. Any restructuring arrangements offered must be appropriate and sustainable for the borrower’s individual circumstances. We are assertively supervising this process to ensure our expectations are being met.”

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1 See: www.centralbank.ie/news/article/speech-the-decade-ahead-governor-makhlouf-12-february-2020