Our update of 17 November 2020 highlighted that the European Banking Authority (EBA) was considering the status of its guidelines on payment moratoria which had been phased out at the end of September 2020 - that article can be viewed here.
On 2 December, the EBA announced the reactivation of these guidelines for a period running to 31 March 2021, citing close monitoring of developments of the COVID-19 pandemic and, in particular, the impact of the second wave and actions taken by governments in many EU countries.
Responding to the announcement the Central Bank of Ireland (CBI) noted that the EBA’s action has no present effect on Irish borrowers as there is no open general payment moratoria scheme operating in Ireland and reiterated that:
- The approach in Ireland is based on supporting borrowers on a case-by-case basis as appropriate to their individual circumstances and affected borrowers should engage with their lenders at the earliest opportunity;
- The longer that repayments are postponed, suspended or reduced, the more likely it is that the worst hit borrowers do not receive the immediate tailored advice or supports needed to address their specific circumstances; and
- There is no regulatory impediment to lenders offering further payment breaks to borrowers provided they are appropriate for the individual borrower’s circumstances (reporting that as at end October 2020 the number of borrowers remaining on active payment breaks was c.24,000 with the number falling further in November).
What does this mean for Regulated Lenders?
The approach espoused by the CBI continues to be to focus on its expectations as set out in its Dear CEO letter of June this year that regulated lenders take a pro-active and consumer-centric approach to protect the interests of their borrowers (albeit this was issued in the context of payment moratoria). The CBI has indicated that it will be monitoring the approach of lenders in its supervisory role and as such their message has not changed from earlier in the year; lenders need to continue to remain actively engaged with their borrowers and borrowers remain encouraged to engage early as noted above.
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About the Author
Tim is an Associate in the Banking and Financial Services team at Hayes solicitors. Tim has extensive experience advising both borrowers and lenders across a wide range of financing transactions including corporate debt facilities, complex cross-border financings, export-credit backed lending and leveraged/acquisition finance.