Comparison with UK demonstrates effectiveness of IBF Code of Practice
All lenders invited to adopt IBF Code
Borrowers in difficulty urged to talk to lenders early
The Irish Banking Federation (IBF) welcomes confirmation today by the Financial Regulator that mortgage lenders have well-established procedures in place for managing arrears and repossessions which clearly show that repossession of a residential property is a last resort. And the IBF is at one with the Regulator in encouraging borrowers who experience difficulty in meeting their mortgage repayments to talk to their lender at the earliest opportunity.
The Regulator’s finding that, in the three and half years between January 2005 and June 2008, a total of 112 residential properties were repossessed by banks and building societies confirms that the level of repossession here is very low by international standards – 32 per year on average. For example, for every 100,000 mortgages issued, three result in repossession in Ireland compared to almost 200 in the UK – demonstrating a significantly different approach to arrears management between the two markets.
The IBF firmly believes that the situation here reflects the fact that banks and building societies subscribe to the IBF Code of Practice on Mortgage Arrears. Under this Code introduced in 2000, lenders agree to adopt flexible procedures for the handling of arrears cases and to assist the borrower as far as possible. The Code makes clear that the lender will not seek repossession of the property until every reasonable effort has been made to agree an alternative repayment schedule. The following are among the key features of the Code:
A commitment to handle genuine cases sympathetically and positively
A willingness to explore, on a case-by-case basis, the suitability of various options that could include changing the amount of the regular repayment, temporary deferral of the repayments, extending the term of the loan, capitalising the arrears and interest.
Details are on the IBF website
“We have full confidence in the effectiveness of this Code of Practice and the figures set out by the Financial Regulator fully support this”, states Pat Farrell, IBF Chief Executive. “We would welcome all lenders subscribing to this Code – not just the banks and building societies. And we would strongly encourage any borrowers who may be experiencing difficulty in meeting their mortgage repayments to engage with their lender at the first opportunity. We know from talking to our own members and from working closely with representatives of the Money Advice and Budgeting Service (MABS) how important it is for early communication between borrower and lender in order to explore the basis for a mutually-acceptable repayment arrangement.”
The IBF and MABS are currently finalising agreement on a new Protocol on Debt Management which is designed to improve the operational effectiveness of engagement between creditor representatives and MABS money advisers on individual cases of consumer debt.
Note to Journalists: The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
Further Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644 Lisa Shevlin, PR Executive, IBF,