Fianna Fáil Spokesperson on Finance Michael McGrath has accused the Central Bank of failing to protect vulnerable mortgage holders after it emerged the Central Bank has not imposed a single sanction on banks for failing to honour the mortgage arrears rule book despite evidence of breaches occurring.
Deputy McGrath has expressed serious concern that this ‘hands off’ approach of the Central Bank will lend encouragement to the hard line approach now being taken by the banks and lead to a wave of home repossessions.
Deputy McGrath stated: “In a Dáil reply to me this week, the Minister for Finance has confirmed that the Central Bank has never issued a sanction against a bank for breaching the Code of Conduct on Mortgage Arrears (CCMA). I find this to be absolutely incredible in view of the fact that, over the past eighteen months alone, the Financial Services Ombudsman has fully or partly upheld 30 complaints from consumers about their treatment by financial institutions under the CCMA.
“In addition, at a meeting of the Joint Oireachtas Committee on Finance dealing with mortgages on 30 April this year, the Governor of the Central Bank acknowledged that:
“in a limited number of cases we found issues of potential breaches of the code of conduct on mortgage arrears, CCMA, relating to the timing of the letters in advance of legal proceedings for repossessions commencing. The code of conduct is an important underpinning to the targets process. The process is a prudential action and the code of conduct is there to protect the borrower. The two work in tandem. The Central Bank will commence a review of CCMA compliance in the second half of the year and these findings will be taken into account as part of the targets review.
“The failure of the Central Bank to impose a single sanction against a lender is a worrying indication of a continuing deferential approach to the banks by the regulatory authorities. As well as being the prudential supervisor of the banks, the Central Bank has a crucial role to play in consumer protection. By not penalising the banks for breaches of the CCMA, the Central Bank is singularly failing to protect mortgage holders who already have the odds heavily stacked against them.
“With the main banks initiating or threatening legal action against 30,000 family home mortgage holders, the Central Bank has to immediately carry out a detailed audit of the banks’ compliance with the CCMA. Moreover, the Central Bank has to be prepared to act and impose sanctions if it finds that the banks have breached the Code.”