Advisers criticise lending criteria

BANKS DO not want to lend money “for the next five years”, an Oireachtas committee was told yesterday. The Future Group, set up by four financial advisers from Cork, told the Joint Committee on Economic and Regulatory Affairs that lenders amended their criteria to suit their own agenda and “are only interested in deposits”.

The group, which has already met Minister for Finance Brian Lenihan, asked the committee to endorse a plan to provide free financial advice to people with debt problems, which it would run with finance from the Financial Regulator.

In a presentation to the committee, the group said the flow of liquidity to individuals and businesses was deteriorating daily. Banks had a list of professions they did not wish to lend to including solicitors, engineers, auctioneers, retail assistants and temporary nurses and teachers.

People with referral fees, a charge imposed if a direct debit is paid which puts a client in overdraft, were “automatically declined” for mortgages by some banks, even if they settled their overdraft and had no further difficulties.

Banks were also cutting previously facilitated overdrafts by 50 per cent, the group said, and when a credit check showed up a missed repayment, even if it had been remedied, credit ratings for individuals were affected for five years.

“Lenders have amended their criteria to suit their own agenda and as a result, genuine cases that should pose no risk to the lender are not being facilitated,” the group said. In some cases, the reasons for decline were “wholly illogical”, it added.

Explaining their plan to help people with debt problems, the group said the Money Advice and Budgeting Service was not able to cope with the volume and complexity of debt and there were delays of five to eight weeks for appointments in some areas.

The group could offer advice to individuals and small and medium enterprises and mediate with lenders, its spokeswoman Frances O’Hanlon said. She told the committee they were already providing the service for free to some clients who were unable to pay, but could not continue to do so.

But former ceann comhairle John O’Donoghue questioned if the “objective of the exercise” was profit or altruism. He said the committee was not in a position to endorse one section of private business over another.

Senator Shane Ross said the group had failed to put figures on how much funding would be required. He said their plan was “full of a lot of aspirational stuff”.