NAMA can’t ‘opt in’ to regulation

Something that has been circulating of late is that if NAMA buy the Irish Nationwide (subsumed into IBRC) loan book that they will follow best practise and no borrower will be ‘less well off’ due to it in terms of regulatory protection.

This is not true because an important aspect of regulatory protection is that of recourse to the office of the Financial Services Ombudsman (FSO). This recourse is covered in section 51 of the Code of Conduct on Mortgage Arrears and also in the Consumer Protection Code of 2012 10.9(d).

Simply stating that you will follow or mimic the existing codes and regulation isn’t the same as actually being covered by them, it doesn’t grant jurisdiction. The FSO cannot structurally cover a complaint made against an unregulated entity. It really isn’t far different than going to them with a complaint about a restaurant you ate at, if they don’t cover the institution they can’t deal with the complaint.

The oft overlooked point is that the granting of regulation …

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2013 the year banks told borrowers to hand back the keys?

We help different people with different things, and while most of our debt problem clients face broadly similar reactions from the banks, we think it’s important to post the documents which show a presence of lashings and lashings of stupid. To see the full letter click on the image at the bottom of the post

One such document was received by a client recently from the Irish Civil Service building society, also known as ICS and a subsidiary of Bank of Ireland. It’s no secret that posting these documents makes us highly disliked by the banks,  but if people don’t expose them then the great farce will go unchallenged.

What makes this case interesting is that the bank offered a short term forbearance plan which the client asked them to tweak. Then they turned around and changed their mind and went from ‘we can give you a few months to get your affairs in order’ to ‘sell the house or even abandon it’.

In 2008 to now I have never heard a bank say that walking away (also called jingle …

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Why make out that a phone call is a felony?

I’m normally a fan of Stephen Donnelly’s but have to wonder if there is some bias in his article this week.

In looking at this from a compliance perspective (because the allegation is really that regulations are being broken by the bank) we will consider three key pieces of legislation

The consumer credit act 1995 The consumer protection code 2012 The code of conduct on mortgage arrears 2009-2011

All of which are statutory codes with full enforcement powers built into them.

It starts with this paragraph ‘IF your bank phoned you up to four times a day, would you feel harassed? Imagine, as your mortgage arrears mounted, that you had maintained contact with your bank, as you’re meant to do, but they kept calling’.

The person was apparently being harassed, called ‘early morning and late evening’ – which I assume is an a way of alluding to wrongdoing but not actually stating whether section 46 of the Consumer Credit Act was being broken or section 8.14 of the Consumer Protection Code.

We also can’t look …

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The Consumer Protection Code 2012 (CPC)

A few notes on the most up to date regulation is perhaps overdue, normally regulation is part of work and not something the general readers care about, but with the increased focus on it we have had people asking how it works so I’ll start to cover some of it.

The Consumer Protection Code (CPC) puts several responsibilities onto financial firms, it offers various protections to consumers and is available on the web.

One of the requirements is for the firm to have a ‘terms of business’ letter which they give to clients prior to offering advice and is covered in section 4.13 of the code.

Using the term ‘independent’ are no longer usable at will. An intermediary can only use the term ‘independent’ in their trading or company name (or in how they describe themselves) if their principle regulated activities are based on fair analysis of the market and it allows the consumer to pay for their …

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Are banks breaking rules by charging account fees?

“AIB will charge me for not having enough money in my account, apparently I can’t even afford to be broke.”

Regulation is a tricky area, it is a branch of law more than of finance and like law it is open to interpretation, precedent and individual cases.

So when I see Anne Fitzgerald of the NCA say that AIB is ‘breaking the rule that required it to act in the best interests of its customers’. I am concerned because it doesn’t present the context of the rule, rather it just makes a statement.

The actual rule being mentioned is Section 2.1 & 2.2 of the 2012 Consumer Protection Code. Chapter 2 in general covers consumer credit, payment services, and electronic money. The actual text of this section (2.1/2.2) is as follows:

“A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it that it (2.1)acts honestly, fairly and professionally in the best …

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Standard Financial Statement or SFS – for people in mortgage arrears

If you go into arrears on your mortgage or you talk to your lender because you believe you are a ‘pre-arrears’ candidate then you will be asked to fill in a ‘Standard Financial Statement‘ or SFS which is part of the Mortgage Arrears Resolution Process (MARP) which started last year.

Engaging with the lender is a key tenet of this and filling in the SFS and liaising with the lender on aspects of it. The information in this is what will be used to negotiate the repayment that you will pay in cases where lifestyle adjustment does not allow you to make the full payment.

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New ‘Consumer Protection Code’, the proposed CPC47 going forward.

The original Consumer Protection Code was brought out in 2006 and it was a welcome augmentation to the Regulatory environment, since the financial crisis began we are increasingly hearing calls for ‘more regulation’.

Naturally, good regulation is of benefit to both industry and consumers alike, perhaps industry is actually the greater beneficiary because faith in the financial system allows funds to flow freely and in turn financial firms can make profits with greater ease albeit at lower margins (increased competition tends to go hand in hand with that environment).

However, Regulation that is there to hog-tie or ‘get back’ at either beneficiary of regulation is flawed, so something that hammers banks or consumers is ultimately not an achievement but a regression, and for that reason I can’t help but feel sceptical about the new Consumer Protection Code which will come about from the briefings laid out in consultation paper 47 (recently closed).

Where are the key areas that the failure arose?

Bank …

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The issue with the case against ‘Reckless lending’

In operations I have two main roles, firstly is the obvious operational aspect of any company which has to do with logistics of loan suppliers and our distribution to clients as well as looking at the general business planning to ensure we are always at the best of our abilities. The other role is regulatory, I act as a compliance officer, while that is not a legal position, it is one in which the practical aspects of law surrounding financial services are to be found, how it works in real life.

On that basis I was surprised to see that there were several articles talking about the use of tort law to prove negligence in lending, and with that, a particular reference to the Consumer Protection Code (CPC) which has since been updated. While I admire the initiative being taken by New Beginning I have some doubts which I will express here.

One issue we have had with regulation is that it actually …

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