On 13 March, the Central Bank of Ireland announced new measures to address mortgage arrears, including the publication of performance targets with the main mortgage banks and the proposed changes to the Code of Conduct on Mortgage Arrears (CCMA). The new approach is aimed at ensuring banks offer and conclude sustainable solutions for their customers in arrears by setting specific performance targets and proposing revisions to provisioning standards. The Central Bank is also proposing to update the CCMA so that it continues to provide protection to customers who cooperate with their bank while facilitating and promoting the resolution of arrears cases. The Bank has set out specific performance targets for banks to ensure borrowers in arrears will be put on more sustainable solutions, suitable and tailored to their individual situation. Banks will be required to meet specific targets for proposing and concluding sustainable solutions for borrowers in arrears over 90 days. These targets will include:
- quarterly targets will be set in relation to the number of sustainable solutions proposed to customers. These will become progressively more demanding over time. The first targets will apply for the quarter ending 30 June 2013 and will be enhanced in subsequent quarters.
- progressively more demanding quarterly targets will be set for the conclusion of sustainable solutions. These will be set in due course and will apply for the quarter ending 31 December 2013 onwards; and
- in addition, specific and more detailed targets will be set for individual banks, based on their capacity, systems and processes, principally focusing on the handling of early arrears. Thus the Bank will audit each bank's performance against the targets periodically, with regular reporting requirements established.
A consultation paper on the review of the CCMA has also been published detailing proposed changes to strengthen the Code's protections for borrowers, while ensuring it allows for effective and timely resolution of individual arrears situations. Issues being considered for review include:
- new safeguards to ensure borrowers are given sufficient warning before being classified as "non-cooperating";
- changes to the contact levels permitted while ensuring consumers are not subject to harassments;
- transparency on resolution options so borrowers have a full understanding before making a decision; and
- consideration of whether there is merit in allowing a lender to move a borrower in arrears off a tracker rate where the lender has offered an alternative arrangement which is more advantageous in the long term.