Vulnerable borrowers subjected to ‘continuous harassment’ by investment funds, Dáil told

Vulnerable borrowers have been subjected to “continuous harassment” by investment funds over the last ten years, the Dáil has been told.

Fine Gael’s Bernard Durkan said he is aware of a case where a lending institution representative called to a widow on a nightly basis, until she was “forced out of her house”.

The Kildare North TD raised the issue of the activities of some lending institutions and fund managers during the Topical Issues session in the Dáil.

Mr Durkan said it mainly relates to funds that were sold over from the pillar banks in a package to the investment fund managers and some of the loans had been sold on again to third parties.

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He said he is concerned at “the new urgency on the part of these people who are asset managers who seem to have with renewed vigour the attitude of pursuing the borrowers in a way which wasn’t evident in the past.”

Mr Durkan said that offers of repayment arrangements being made by borrowers are rejected on the basis that they are “unsustainable”.

He said that over the last decade some borrowers have been “subjected to continuous harassment from the lender”.

Mr Durkan added that he knew of one case “where the lending institutions representative appeared on the doorstep of a widow on a nightly basis until such time as he forced her out of the house, forced the sale of the house in order to keep his books balanced.”

He added: “All this occurred as a result of the lending institutions of this country lending unwisely.”

He said that there’s a view that the borrower “had a hand in this as well” but he said “the lending institutions were primarily responsible for lending to the extent way, way beyond the collateral available and that they knew that wasn’t there”.

Mr Durkan asked that there be a review of the activities of lenders and funds and “the tendency for putting people into receivership much quicker than previously and forcing the issue to conclusion, not to the advantage of the borrower.”

In response Minister of State Joe O’Brien – who has responsibility for Community Development and Charities – said the Central Bank has put in place a range of measures to protect borrowers under the Consumer Protection Framework.

He said this framework is strong and it includes the various Central Bank and statutory codes of conduct such as the Consumer Protection Code, and the Code of Conduct on Mortgage Arrears (CCMA).

Mr O’Brien said that “where a borrower is experiencing repayment difficulty, a regulated entity must explore all the options for an alternative repayment arrangement – or an ARA – offered by the entity to determine if a more suitable and sustainable repayment option is available based on the borrower’s individual circumstances.

“If a borrower is not satisfied with the options proposed or if the regulated entity declines to offer an ARA an appeals mechanism is provided for in the CCMA.”

Mr Durkan said Mr O’Brien’s response is “the way it’s supposed to work” but he wanted to know the extent it actually happens.

He said it would be “very helpful” if there was to be a review to identify “where there are deviations from the regulations in favour of the lending institutions.”

Mr O’Brien said “banks, other regulated mortgage lenders, loan owners and servicers are required as a matter of law to follow the statutory Central Bank codes of conduct”.

He said “failure to do so can result in the Central Bank using its range of powers to ensure adherence to the codes, including its administrative sanctions, procedures or legal action where appropriate.”

Mr O’Brien also listed the appeals options open to borrowers including a complain to the Financial Services and Pensions Ombudsman.

He also told Mr Durkan that if he has information to indicate that a regulated firm is not complying with the Central Bank’s Consumer Protection Framework he should pass it on to the Central Bank.