Doherty seeks Central Bank assurance on customer protection

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Doherty seeks Central Bank assurance on customer protection
Doherty seeks Central Bank assurance on customer protection

Pearse Doherty has written to the Governor of the Central Bank for assurances that they are protecting customers from banks allegedly profiting from the Coronavirus pandemic.

Bank and non-bank lenders, together with the Government and Banking and Payments Federation announced a series of measures, including a 3-month mortgage payment break, for customers affected by COVID-19 earlier this month.

The Sinn Fein’s Finance spokesman raised the issue in the Dáil chamber last week, and now says it “has become increasingly clear that these measures are not being implemented” in the interests of customers.

“It has become apparent that banks, instead of offering a three-month mortgage payment break for affected customers, is using this arrangement as an opportunity to reprofile the interest that would have been paid over the three months throughout the remaining mortgage term, before then applying additional interest,” Mr Doherty wrote in his letter to Gabriel Makhlouf.

Mr Doherty alleges, citing Bank of Ireland as an example, that some customers would apply additional interest of €1,804 that would not otherwise have been payable affected customers who apply for a mortgage break

A customer with an outstanding mortgage balance of €200,000, with a fixed rate of 3% in the first three years rolling into a 4.2% variable rate for the remainder of the term, instead of paying €142,890 in interest over the remainder of their term, will pay €144,694, according to the letter.

“It is the responsibility of the Central Bank to protect customers and uphold the Consumer Protection Code,” Mr Doherty added.

“What steps will the Central Bank take to respond to the approach taken by banks, who instead of offering a true mortgage break, are increasing the costs for consumers over the lifetime of their mortgages by applying extra interest?

“At a time when so many workers and families are facing a collapse in household income, our banking sector is approaching this crisis as an opportunity to profit rather than as a time to act in the interest of citizens.”

Mr Doherty went on to ask for further assurances the Central Bank that the credit rating of those looking for a mortgage break would not be negatively affected.

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