Central Bank Consultation Paper on SFS and MARP

Brendan Burgess

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The Central Bank has published a consultation paper on the layout of the Standard Financial Statement.


In a pre-consultation I said that I thought it was ridiculous having a public consultation on the content of a form and that it should be just a part of a review of the MARP and CCMA generally.

But they have gone ahead with the formal consultation on the Appendix to the CCMA.

They have also used the consultation to get feedback on the CCMA generally to inform a review at some unspecified time in the future. I will certainly give feedback on this aspect of it.

Feedback outside the scope of this review
While the scope of this consultation is a targeted review of the SFS document and associated
supports to ensure its effectiveness, the Central Bank has also received feedback from
stakeholders on certain requirements of the CCMA relating to the MARP. It is not proposed to
proceed with amendments to the MARP or the wider CCMA at this time, as this will require deeper
consideration and analysis. However, while we are not making any specific proposals at this point
in time, Part 2 of this paper provides an opportunity for stakeholders to raise views and
suggestions on the requirements of the MARP, and/or on the requirements of the CCMA more
generally. The Central Bank will give due consideration to any feedback provided in this context
in a future wider review of the CCMA, and any proposals developed will be subject to public
consultation.


Part 2
...the Central Bank also received wider
views from stakeholders on the MARP, and requirements of the CCMA more generally. In
particular, the working group raised views on the following:

 Whether there are certain situations where an SFS may not be required;

 The merits and demerits of a potential short-form SFS for specific situations;

 The period of time an SFS could be valid for, or the frequency at which it is requested;

 Whether there are certain situations where the MARP as a whole may not need to be applied;

 How a regulated entity can be more transparent about the ARAs available in its suite of options;
and
 The treatment of separated borrowers.

The Central Bank is of the view that feedback on the above points requires deeper consideration
and analysis. While the Central Bank is not making any specific proposals in this context at this
point in time, we welcome any views or suggestions stakeholders may have on the MARP, or on
the requirements of the CCMA more generally.

The Central Bank will give due consideration to any feedback provided in response to this part of
the paper in a future wider review of the CCMA. At that stage, any proposals that might be
developed on foot of the feedback provided will be subject to public consultation, where
stakeholders will be given the opportunity to raise further and more detailed views.

Question for discussion: Do you have any views or comments you wish to raise on the
MARP, and/or the CCMA more widely?

 

Brendan Burgess

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43,281
My main suggestion was that for very many cases the lender should be able to agree a rescheduling of a mortgage without the need for the formal MARP or the need to complete an SFS or, maybe, with a one page SFS.

Examples:

  • Someone has a temporary financial problem e.g. they are between jobs, and they want a short payment break. The lender should be able to agree that with the borrower over a phone call and follow it up with a letter with the new agreement.
  • Someone who has never had arrears, who has plenty of positive equity in their home, but who wants to extend the term of their loan to reduce their monthly repayments. For example, they might be taking a one year career break.
  • Someone who has overpaid their mortgage in the past and reduced the term instead of the monthly repayment. Under the CCMA, they would have to complete the SFS and have their mortgage restructured even if it is due to be repaid in full by the original date.

None of these should be forced to fill in the detailed SFS. This is time consuming for the borrower and for the lender.
 
Last edited:

Brendan Burgess

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43,281
The Covid payment breaks is a good example of how short term payment breaks should be dealt with.

A phone call and some basic details leading to a short-term break or restructuring.
 

Brendan Burgess

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43,281
The SFS and MARP should be used only in the following circumstances

  • Serious arrears have already accumulated
  • There has been a major change in circumstances which make a full review necessary
    • a significant and permanent long-term reduction in the borrower's income
    • A separation of two joint borrowers
    • a significant increase in expenditure
  • The person needs a major restructuring such as a split mortgage or an extension of the term beyond the age of 70 or mortgage to rent
  • The borrower is in deep negative equity
 

RedOnion

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My main suggestion was that for very many cases the lender should be able to agree a rescheduling of a mortgage without the need for the formal MARP or the need to complete an SFS or, maybe, with a one page SFS.
But this is already possible for mortgage holders who aren't already in payment difficulty. For example AIB offer payment moratoriums with a simple 1 page form.

There are reasons outside of CCMA / MARP that banks need to go through a similar process. For example they need to show that a forebearance is sustainable if they don't want it treated as a non-performing loan. 'fixing' one issue doesn't remove everything else.
 

Brendan Burgess

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43,281
But this is already possible for mortgage holders who aren't already in payment difficulty.

But only if they are not in payment difficulty!

If someone is between jobs and can't afford their mortgage this month, they are in payment difficulty.
If someone wants to take a career break, it could be argued that they would be in payment difficulty.
 
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