Noonan's view on the equal treatment of new and existing customers

QUESTION NO: 256
DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Michael McGrath
for WRITTEN ANSWER on 29/09/2015


To ask the Minister for Finance if he will legislate to require banks to give equal treatment to new and existing mortgage customers; and if he will make a statement on the matter.

REPLY.


Firstly, as you know I have taken steps to ensure that banks provide real options for borrowers with high mortgage repayments.

To summarise actions taken to date, I requested a report from the Central Bank on the topic which was published in May. I also met with the six main mortgage lenders and outlined my view that the interest rates being charged to Irish customers were too high. Furthermore, I stressed to the banks that they should treat new and existing customers in a fair manner. The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for SVR customers.

I have recently concluded a further series of meetings with these banks and the reality is that the majority have put options in place to allow borrowers to reduce their monthly repayments. I am pleased to see that the majority of lenders have offered their new reductions and products to both new and existing customers.

I would therefore encourage borrowers to contact their bank to see what is available to them in their particular circumstances or consider moving to another bank if the offer is not satisfactory.

Central Bank research suggests that 21% of existing PDH variable rate mortgage customers could save by switching their provider. I expect that if financial institutions are convinced that there is a threat that they will lose existing customers, they will reduce the rates that they currently charge such customers. Competition rather than legislation represents most sustainable long-term solution to this problem. In this regard, the Competition and Consumer Protection Commission website www.consumerhelp.ie is a valuable source of information on the rates charged by various financial institutions.

Legislation could have significant negative implications for competition and reduce the offerings available to new and switching customers.

Noonans harps on here about switching . Obviously he doesn't realise that people with high LTV or negative equity can't switch and are trapped or captured. To me this isn't being hammered home to him enough. I will email him about this I hope plenty of others will too and I will ask what is he going to do about it although I can make an educated guess, eg nothing.

Very disappointing to say the least. This man is ignoring the plight of people who are imprisoned by banks. Banks rule and people suffer. There should be a price to pay for his inaction and I know where my vote won't be going come the general election. I will be conveying this to my local tds today.

I see Noonan demonstrating the same level of concern for ordinary people as during the Hepatitis C scandal.

Reading between the lines, "I have taken no concrete actions to help these people with their petty concerns. Leave me alone."

Noonan only knows the word switching at this stage.Most people can't switch so it's time he woke up.
However he will be switching soon I.e.out of Finance and onto plenty of fresh after grass in Limerick.

It is wonderful from the banks' perspective, they cannot lose. They reap profit when they relax lending standards and create the bubble. Then the whole thing inevitably goes south but they are systemic enough for them not to go under, so they are bailed out by the taxpayer. The
taxpayer needs the banking system that continues to lend, re-capitalized banking system also means lower lending rates across the board. OK, I get it. The economy begins to recover. However many properties bought previously remain in NE or low equity. The very banks saved by the taxpayer previously realize these people cannot switch and so they turn against the very people that saved them like rabid dogs and impose arbitrary rates that are 3X trackers and sometimes 2X European average.

I hope I am not the only one who finds this situation extremely odd. If new reasonable lending rules regulations (3.5 LTV and LTI) ensure that my house would never cost as much as I bought it for (which is fair since it should not have cost as much in the first place), I, as a taxpayer who bailed out the bank that however charges me an arbitrary rate, expected some governmental regulation that would have mandated a lower rate. It beggars belief that it is somehow OK for both tracker and SVR customers to benefit from the working banking system but only for the tracker people to benefit from it.

Brendan Burgess said:

I expect that if financial institutions are convinced that there is a threat that they will lose existing customers, they will reduce the rates that they currently charge such customers.

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This one sentence shows how detached from reality Noonan is. Banks are gouging existing svr mortgage customers precisely because they know many of these people can't switch products because of negative equity, arrears and/or shot credit records which result from the days of the Celtic tiger. Hard to listen to Noonan's patronising, ill informed drivel.

Brendan Burgess said:

I am pleased to see that the majority of lenders have offered their new reductions and products to both new and existing customers.

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This is the key phase to me in the response to Michael McGrath's question and in particular the word "majority". This is factually correct, in that from the looks of it AIB, Ulster, PTSB and ACC are making their options available to new and existing customers (to my knowledge), whereas BOI and KBC are not.

So what is the minister doing to resolve this issue in particular - which was Michael McGrath's question? The simple answer is nothing, and has no intention on doing anything.

Sadly, the only things the banks will act on is loss of customers (and revenue). Not enough people are switching (some because they cannot and others because they suffer from inertia), so the banks will continue to act the way they are acting.

Personally, I have already communicated by position on this to the both Fine Gael candidates due to run in Dun Laoghaire (and no response received to date). The only party seemingly willing to address this issue at the moment is Fianna Fail, and I cannot see myself voting for Mary Hanafin and doubt Cormac Devlin will be elected - so what is one to do? Answers on a postcard please

Only way to get at our saviour michael noonan (well in his eyes) and the banks is save your backside off and pay down your debt when you can. Life can still be enjoyed with simple things

Yes, I love the sackcloth and ashes existence, while the financial fat cats ( whom the Irish taxpayer bailed out ) continue to enjoy chateaux Lafite red wine with their fillet steaks with oyster sauce on the company account, while drawing down large 6 figure sums ( not including share options and private pension top ups, don't want joe public knowing they still get paid 7 figure sums in real terms ). Then, if you are in arrears, you get a bank official enquiring whether you still have sky tv. Ah the simple life!

gnf_ireland said:

This is the key phase to me in the response to Michael McGrath's question and in particular the word "majority". This is factually correct, in that from the looks of it AIB, Ulster, PTSB and ACC are making their options available to new and existing customers (to my knowledge), whereas BOI and KBC are not.

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I'm with ACC and have received nothing from them in the way of options. In fact the only option on the table was a crazy 5.plus% interest rate to fix. Currently 4.4% SVR.