Code already allows banks ample contact with customers, so why change it?

14 March 2012

Legal rights organisation FLAC today called on the Central Bank to clarify why it should allow banks to make more calls to hard-pressed customers in mortgage arrears, after a state-imposed Code of Conduct had established a limit on such calls just last year.

Reacting to reports that the Central Bank plans to review and possibly raise the limit on banks making unsolicited calls to customers in arrears, FLAC Director General Noeline Blackwell said "at present, the Code of Conduct on Mortgage Arrears limits the number of unsolicited calls a bank can make to a customer in arrears to a maximum of three per month. However this is over and above other calls pre-arranged with the customer or communications required by the Code or other regulatory requirements.

"Let us remember that apart from calls on a residential mortgage, a person may be getting calls about credit card bills, utility bills or from debt collection companies. FLAC would question why any bank would need more than three extra unsolicited calls, on top of other calls to which the customer has agreed, to remind a person of his or her situation."

The Code of Conduct introduced a limit on unsolicited mortgage-related calls precisely because of the earlier situation where banks could phone people at will, resulting in massive stress and upset for customers.

"People were calling FLAC at their wits' end because of frequent and unnecessary calls from financial institutions. People are stressed out enough trying to cope with their situation: while some contact with the bank may be needed, it is going far beyond that requirement to leave it up to the banks to decide how much harassment is enough," said Ms Blackwell.

She continued: "As far back as December 2010, banks were complaining that they needed more freedom to call customers in arrears. With this review it looks like their pestering has paid off. FLAC is simply querying the rationale behind the banks' argument. How will it help the situation for debtors? Where is the independent evidence that the current Code limits are not working?"

FLAC suggested that the Central Bank might put in place a more complete monitoring system to gauge the effectiveness of the Code of Conduct. This should involve talking to consumers about their experience of lender behaviour under the code. Further, FLAC expressed concern at the continuing failure to regulate the activities of debt collection companies in Ireland.

"At the end of the day, if banks want to talk to their customers more, let them follow the Code and make an appointment," concluded Ms Blackwell.

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Editors' notes:

1. FLAC (Free Legal Advice Centres) is an independent human rights organisation dedicated to the realisation of equal access to justice for all. It campaigns through advocacy, strategic litigation and authoritative analysis to contribute to the eradication of social and economic exclusion.
2. You can read the full text of the Code of Conduct on Mortgage Arrears, revised in December 2010.
3. FLAC produced an updated guide to the Code of Conduct on Mortgage Arrears in January 2011.
4. Section 20 of the Code states: "A lender must ensure that the level of contact and communications from the lender, or any third party acting on its behalf, is proportionate and not excessive."
5. Section 21 of the Code states: "Each calendar month, a lender, and/or any third party acting on its behalf, may not initiate more than three unsolicited communications, by whatever means, to a borrower in respect of his/her mortgage arrears or pre-arrears situation. The unsolicited communications do not include any communications to the borrower regarding his/her arrears or pre-arrears situation, which are required by this Code or other regulatory requirements."