Employees do not have a mortgage even if the employer receives a pandemic benefit; criticism mounts against the stance of Central Bank

DUBLIN: A report says that those who make a pandemic payment are less likely to get a mortgage. Criticism has been raised at the Central Bank for coming forward with a proposal in this regard.

In a letter to financial institutions, including banks, the central bank advises employers to consider lending if they are receiving benefits from the State wage subsidy scheme. In this context, there is concern that the ‘Status’ of pandemic payment buyers may deteriorate.

Central Bank

Helena Mitchell, Central Bank’s head of consumer protection in the supervision division, wrote the letter to the chief executives of banks and other mortgage lenders. The letter seeks to clarify in advance whether the impact of COVID-19 will lead to the refusal of the mortgage.

The letter states that, “Some mortgage lenders have not sufficiently considered the impact of these changes on customers in the mortgage application process and have not managed communications with these customers in a proactive and consumer-centric way.”

“The Central Bank expects mortgage lenders to clearly communicate with customers at all stages of the mortgage application process, including those customers who have already received loan offers.”

If there is any material change in the customer’s circumstances prior to the drawdown of funds, it should be made clear to the customer that the loan offer will be withdrawn, paused or varied. The regulator says this message should be included in the loan offer letter.

Labour says discrimination is unacceptable

Labour Finance spokesman Ged Nash said the denial of the loan in the name of the wage subsidy was an unjustifiable discrimination. He said it was an understatement for the central bank to say that some banks did not communicate in a customer-centric manner.

“If the Central Bank’s solution to this is for the banks to check their own homework, which is what they are proposing to do, then I have to say it is a very weak response,” the spokesperson said.

He said a strict response was needed on the issue to ensure that there is no discrimination in lending.

AIB and financial institutions to take action

Meanwhile, AIB had issued an internal memo to staff explaining that it was temporarily suspending lending to users of pandemic unemployment payments and wage subsidies. In addition to AIB, Haven and EBS also reveal that they are stopping mortgages for pandemic beneficiaries. Beneficiaries of COVID-19 will now have to submit new mortgage applications to avail the loan.

Meanwhile, AIB group and the lenders have been reported to be refusing to release funds on mortgage applications that are already approved, when additional checks show employers have signed up for the wage subsidy scheme.

At the same time critics say the central bank’s latest intervention is ridiculous. Criticism was raised last week that the central bank had not taken any action against financial institutions for violating key consumer protection rules over the past four years, except for the tracker investigation. Critics say only two enforcement actions have been taken so far for violating the 2016 Consumer Protection Code.