It is hard to believe but true that Ireland is one of the few countries in Europe where there are no rules limiting the overall debts that a household can accumulate – BUT that’s all about to change. Yesterday the Financial Regulator unveiled a sweep a new measures to put manners on Ireland’s financial institutions as part of a major clampdown on bank lending.
Regulators will now be keeping a very close eye on all lending by banks to households and potential homeowners will now find it even more difficult to get their hands a mortgage as tough new rules will make remove the ease of getting one that was there during the boom times.
Not only that but the idea of imposing a cap on new lending is strongly being considered — especially where consumers borrow to buy a house and the mortgage represents a high proportion of the value of the property.
So in summary, the new rules of the lending game are:
- Banks will be forced to shut down parts of their operations if they are caught taking excessive risks
- The regulator will take legal action against banks that breach guidelines on executive pay, which is currently capped at €500,000 per annum
- Financial institutions will be publicly lambasted if they fall foul of the regulator’s rules
- Bank staff will be suspended if they’re deemed “unfit” to carry out certain functions
Jonathan McMahon who acts as number two to Financial Regulator Matthew Elderfield, warned that his office would “make life difficult and expensive” for banks who took a lax attitude to risk.