The Central Bank of Ireland has issued a letter to lenders, clarifying the protections and limits on contact with consumers in arrears set out in both the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears.
The main clarifications issued relate to:
1. Initial contact – ‘communication’ means a successful communication, i.e. a conversation held with the consumer, a letter sent, a text or an email. This communication is not subject to the limit of three unsolicited contacts. Once this communication is successfully made, any further contacts will count towards the monthly limit on unsolicited communications.
2. Monthly limit on unsolicited communications (3 contacts) – missed calls and engaged numbers do not count towards the monthly limit.
3. Unsolicited personal visits – a lender can make an unsolicited personal visit in relation to arrears, when all other attempts at contact have failed and prior to taking legal action.
With regards to how the visit should be conducted:
– The lender must give at least five working days’ notice to the consumer in writing.
– The letter and visit do not count towards the limit of three unsolicited contacts per month.
– The letter should outline the importance of the engagement and the intention of the visit, the consumer protections available and the relevant contact details for the lender (or its Arrears Support Unit in the case of mortgages).
– The lender should offer to meet the consumer in a local branch instead of their home and should be advised that they may wish to consider having a third party present.
– During visits in relation to mortgage arrears under the CCMA, a lender should offer to explain the Standard Financial Statement (SFS), but cannot insist that the consumer completes the form at that time.
– A further personal visit may be agreed with the consumer in compliance with provision 3.38 of the 2012 Code.
“The Central Bank believes that early, proactive and positive contact is key to assisting the borrower and lender to discuss and agree the best solution and outcomes to an arrears situation,” said director of consumer protection, Bernard Sheridan.
Mr Sheridan added: “The Codes seek to protect consumers from undue pressure by emphasising the requirement for all lenders to be proportionate and not excessive in their communications and engagement. While unsolicited personal visits could be particularly difficult for some borrowers, the Central Bank believes that it is in consumers’ interests for a lender to be able to visit the home where attempts at contact have failed and before deciding to take legal action.”