There is no industry protocol for dealing with the rising number of distressed homeowners. CAROLINE MADDENreports
THE FAMILY home has always had a special place in Irish society, but it is no longer sacrosanct. Whatever the banks and politicians may say, residential property repossessions have become a feature of Irish life. However, because this phenomenon hasn’t been seen since the 1980s, many bank officials have no experience in dealing with distressed borrowers, and frontline staff are floundering in their role as the bearer of bad news.
More than 600 orders for possession – which allow a lender to repossess a property when a borrower falls behind on mortgage repayments – were granted in the courts last year.
The Central Bank is aiming to avert repossessions with the implementation of a new code of conduct on mortgage arrears which requires banks to put in place alternative repayment arrangements where a borrower can’t meet their monthly mortgage payments. Under the new code, which came into force in January, lenders are also required to provide appropriate training for frontline staff dealing with borrowers whose loans are in arrears (or pre-arrears).
However, according to Seamus Sheils of the Irish Bank Officials’ Association, frontline staff have not received organised, systematic training in handling customers in very distressed circumstances.
Unless they are fortunate enough to be based in a branch where the manager is particularly sympathetic and decides to mentor staff, officials are being left to their own devices, he says. One of the problems arising is that very often customers are not aware of the full extent of their financial problems, or the ramifications of those problems. “It often means that the bank official is put in the position of devastating the person even more than they were expecting,” he says.
He explains that these interactions with customers can go one of two ways: either the person breaks down and the official has to try and deal with that, or it goes the other way and the person becomes very angry and takes it out on the person sitting opposite them.
Either way, he says, it’s a horrendous situation for both parties. For staff members trying to cope with this psychological pressure day after day, it can be very draining, he says.
Rather than throwing staff into situations where a borrower breaks down in front of them and they’re left floundering and wondering what they’re supposed to do next, some kind of in-service training such as role-playing should be provided, he says. Staff should be given advice and prepared for the fact that they could be delivering such devastating news that the borrower may break down, or might want to “abuse you or punch you”, he says.
If a training structure were put in place to encourage “old hands” to pass on advice to younger, less experienced staff on the best way of approaching this kind of scenario, it could result in a less distressing experience for both bank staff and borrowers. “I don’t think it’s unreasonable where bank staff are likely to be exposed to that on a fairly consistent basis that there should be some [training] provision made,” he says.
However the banks would argue that once a distressed borrower progresses beyond a certain point, their case is transferred from their local branch to a specialist collection unit within the institution, where staff have been hand-picked for their negotiation and communication skills, as well as their ability to make a judgement call as to whether a workable solution can be agreed to prevent a repossession.
Felix O’Regan, of the Irish Banking Federation, says that although there is no “uniform, industry-wide approach” in relation to training staff, lenders have taken steps within their own training programmes to build up the necessary skills.
Frank Conway of the Irish Mortgage Corporation believes that banks remain “hugely reluctant” to go down the repossession route and are still taking the view that they are far better off working out some kind of solution with borrowers wherever possible. In Conway’s opinion, Irish lenders are showing much more empathy towards borrowers in arrears than US banks. “My sense is that they are probably more accommodating than in any other jurisdiction,” he says.
A spokesman for AIB said it provides interpersonal skills training for staff working directly with customers in arrears. “This training deals with the human and emotional aspects of the customer engagement and focuses on respect for the customer, customer empathy, problem solving and finding solutions,” he said.
“In addition, cases that are deemed to be particularly challenging are reviewed and discussed with senior management ahead of any customer engagement.” Any meetings with customers are held “in the utmost privacy”, he added.
Bank of Ireland said it has teams of “experienced and empathetic” staff to deal with customers in difficulty. “They will work with the customer to review their financial situation and help them to consider all options in managing their finances,” a spokeswoman said.
However the bank declined to elaborate on its precise approach in terms of training staff to deal with the emotional distress that comes with the territory. Although subprime lender Start Mortgages has taken hundreds of actions for repossession orders, it insists it is “acutely aware” of the human side of the challenges facing borrowers in mortgage arrears.
“We treat all borrowers as individuals and take into account their particular circumstances in working towards satisfactory payment arrangements,” said Start’s head of risk, Paul Murphy.The best advice for borrowers struggling to make their mortgage repayments is to keep the lines of communication open with their lender. If borrowers go to ground, refusing to respond to letters or answer calls from their bank, then their case is much more likely to end up in court and ultimately in repossession.
