Banks and firms acting for vultures warned on handling of mortgage arrears
The qualify of customer services for those in early mortgage arrears needs to improve, the Central Bank says. Photo: Getty Images
Banks, non-bank lenders and firms that service mortgage accounts on behalf of vulture funds have been warned by the Central Bank about their handling of homeowners that are going into arrears.
A letter has been sent to the bosses of the financial firms by the regulator amid concern about surging interest rates pushing more families into missing payments.
Customer service and the supports for borrowers facing early arrears need to be improved, the Central Bank told the chief executives.
A review of early mortgage arrears supports was carried out by the Central Bank. It concluded that solutions are being found for borrowers in difficulty.
But the probe also found firms had:
The firms have now been warned about areas for improvement in how they provide information as well as how they engage and support customers through the mortgage resolution process.
Director of consumer protection at the Central Bank Colm Kincaid said: “The Central Bank has carried out this review to ensure the financial system is supporting borrowers in or facing early arrears on their mortgage.
“It comes as we see an increased number of borrowers falling into early arrears, as increased costs of living impact on borrowers’ finances.”
Mr Kincaid said the probe found firms have made improvements to their processes and supports.
But it also found the “quality of customer service is not yet where it needs to be in the context of the specific challenges for borrowers facing early arrears at this time”.
He said: “We found instances of late and incomplete information provided by lenders; unclear website information; inadequate follow-up with the borrower; lack of assistance in completing paperwork; and failures to recognise where borrowers were experiencing financial difficulties.”
The publication on the probe does not name firms found to be operating below service levels expected or mention if they are banks or credit servicing firms acting for vulture funds.
The regulator said it is critical that firms make these improvements to meet their responsibilities to support consumers in or facing mortgage arrears and avoid the risk of those arrears becoming longer term.
“Mr Kincaid said: “This needs to be a priority for all firms.”
The Central Bank has also encouraged firms to make greater use of temporary alternative repayment arrangements (ARAs) to support borrowers where there is a risk that their situation will get worse during the time needed to gather information and assess the situation.
The review found minimal usage of these types of temporary alternative repayment arrangements in the majority of firms.
And it was not always clear in firms’ policies what circumstances exactly provide for their use.
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