HML - CBI Revised Code of Conduct 27/06Dealing fairly with borrowers in arrears

Background

•The Central Bank of Ireland published the revised Code of Conduct on Mortgage Arrears on 27 June 2013, which sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears. 

•The aim of the changes are to strengthen the consumer protections already in place to ensure that:

– borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender,

– long term resolution is sought by lenders with each of their borrowers,

– borrowers who cooperate with their lender retain their protections.

•The revised CCMA came into effect from 1 July 2013 but it is recognised that compliance with this may require lenders to amend systems and procedures and implement staff training. The CBI have indicated that a bedding in period of six months will be allowed, provided that lenders are actively progressing their transition to the new requirements. The CBI will be closely monitoring lenders’ interpretation of the code and implementation plan.

How will this impact lenders?

•The new code provides greater clarity around when a borrower is considered to be cooperating and gives lenders increased power to take action against those borrowers classed as not cooperating.

•The removal of the three unsolicited contacts and permitted unsolicited personal visits will improve lenders’ opportunity for establishing contact with borrowers that are not cooperating.

•Other requirements, such as additional communication and information requirements and an expanded list of alternative payment arrangements, should help encourage borrowers to contact their lender and will continue to protect those who are cooperating.

1© HML 2013. All rights reserved.

How can HML help?

• Conduct strategic contact campaigns utilising dialler technology - proven to enable significant control over contact strategies to ensure contact is proportionate and not excessive.

• Capture all borrower contact and activity on our iConnect system, including issuing appropriate letters - maintaining a full account audit trail.

• Existing call recording functionality to capture all telephone conversations with the borrower. 

• Carry out a full Standard Financial Statement fulfilment service - focused on engaging borrowers into MARP and encouraging the return of SFS documentation, ensuring this is completed and challenged where required.

• Manage all aspects of the litigation or legal process - including liaising with third parties such as solicitors, receivers and asset managers.

• Provide comprehensive Management Information on all account activity and help to both baseline and monitor the effectiveness of forbearance, restructuring and other treatment strategies.

• Carry out appropriate account monitoring and provide oversight to ensure fair and transparent borrower outcomes are being delivered.

HML currently provides end-to-end arrears management for a number of Irish clients and is actively engaged with borrowers who are experiencing financial difficulty. On a typical portfolio over the last 12 months, we have achieved:

– over 35% uplift in the number of accounts with an SFS captured

– an increase in the volume of accounts with SFS making a payment each month to over 85%

– over 75% increase in the number of accounts paying the full monthly payment with SFS gathered over the period

2© HML 2013. All rights reserved.