Banking Culture Board warns banks on Covid policies

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The success of Irish banks’ efforts to rebuild public trust after the financial crisis and tracker mortgage scandal will be determined by how they deal with vulnerable customers during the Covid-19 economic crisis, according to a body that was set up last year to improve how the industry behaves.

The Irish Banking Culture Board's (IBCB) chief executive Marion Kelly said in organisation's annual report, published on Thursday, that the way that member banks support customers during Covid-19 "will impact on our reputations and trust levels for many years to come".

A spokeswoman for the IBCB that the industry-wide move in the middle of March to introduce payment breaks for borrowers affected by the economic shock amounted to “swift collective action”.

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“The manner in which IBCB member banks continue to support their customers following the end of payment breaks via a range of options will be closely monitored by the IBCB,” she said. “It is recognised that the IBCB and member banks have an opportunity to use this crisis to demonstrate that lessons have been learned from past mistakes.”

Meetings of the board, which includes senior executives from the five retail banks, consumer and industry representatives, have focused on how banks are treating customers during the crisis, she said. Ms Kelly did not give examples of specific actions the IBCB asked banks to take.

The five banks had extended 67,000 Covid-19 payment breaks for an initial period of three months to owner-occupier borrowers by the end of May, according to Central Bank data. By the end of August, half of the borrowers had returned to regular payments as their circumstances improved.

Extended payment breaks

While banks have said the numbers coming off extended payment breaks of six months have been better than expected in recent weeks, thousands of borrowers will need further forbearance and restructuring. With the Government having imposed Level 3 coronavirus restrictions across the State this week, and amid mounting calls from health officials for tougher controls to slow the spread of the disease, analysts expect that many more households will run to trouble meeting loan repayments in the coming months.

The IBCB plans to run a survey of bank customers and other “stakeholders” by the end of this year on their views of the financial firms.

Initiatives that the board has been working on since it was established in April last year include improving how the industry deals with bereaved customers and staff who are prepared to “speak up” on issues of concern.