BANKS HAVE started employing private detectives to carry out checks on borrowers with substantial mortgages if they claim they are not in a position to service their debts, a conference in Dublin has heard.
Peter Brown, managing director of the Irish Institute of Financial Trading, told the Festa economic think tank’s autumn conference that banks were increasingly unwilling to accept the word of people who said they were unable to pay their debts.
He said if there was a suspicion that cash streams were being hidden, investigators were being hired to establish the bona fides of borrowers.
Mr Brown also told the conference that while Bank of Scotland (Ireland), now known as Certus, continued a policy of widespread debt forgiveness in the Republic – particularly with regard to its commercial loan book – the prevailing culture of the State’s indigenous banks had led to an unwillingness on its part to meaningfully engage with distressed borrowers.
The culture would change only when new chief executives took office and realised that unless they cut deals, they would be forced to preside over loss-making business for long periods and miss out on profit-linked bonuses as a result.
The two-day conference, which is examining strategies for dealing with Ireland’s debt crisis, was opened by Minister for Social Protection Joan Burton yesterday.
She once more called on Irish banks to engage meaningfully with distressed borrowers.
“I would like to see that the banks, which have been recapitalised at enormous cost to the taxpayer, are forced to deal in a fair and reasonable manner with customers that have got into trouble often as a result of reckless lending by those very same banks.”
She wanted to ensure that the funds they had received “at enormous cost to this country” contributed to “resolving the heavy mortgage debt of burden which is the legacy of their reckless lending spree”.
Ms Burton also praised the role of the Money Advice and Budgeting Service (Mabs), although broadcaster and mortgage expert Karl Deeter questioned whether it provided the taxpayer with value for money.
He said a way to encourage banks to meaningfully engage with borrowers in difficulty would be to make them fund a third-party mediation process along the lines of Mabs.
“If the banks had to pay for this third-party mediation every time it took place, then they would be much less likely to let it get to that point and they would engage with their customers much sooner.”
