Government and Banks must provide for payment break extension without charging borrowers additional interest – Pearse Doherty TD
Sinn Féin spokesperson on Finance, Pearse Doherty TD, has called for the Minister for Finance and the banks to clarify if they will extend COVID-19 payment breaks by 3 months without charging additional interest to impacted borrowers.
This comes following an announcement from the European regulator this morning that it would allow a further extension of the breaks.
The Donegal TD had previously been critical of the Government and the banks for charging borrowers additional interest when they availed of the payment breaks, despite it not being required under the EBA guidelines.
Teachta Doherty said:
“This morning the European Banking Authority announced that it was reactivating its guidelines for COVID-19 payment breaks in response to the second wave of the virus across Europe.
“This will allow borrowers who have lost jobs or income as a result of COVID-19 to avail of payment breaks of up to 9 months with an application deadline of 31st March 2021.
“It would allow Irish borrowers who had taken a 6-month payment break to avail of a 3-month extension.
“Due to Government inaction, Irish borrowers were only able to apply for 6-month payment breaks while borrowers in Germany, Spain and Italy were able to avail of breaks of up to 12 months.
“Crucially, as I have said since this crisis began, the European guidelines do not require banks to charge additional interest during the payment break period.
“Disgracefully, the banks charged borrowers additional interest during their payment break, increasing their outstanding debt by thousands of euro. That was wrong and went totally unchallenged by the Government.
“The Government and the banks must now clarify if they will be applying these guidelines to allow borrowers to who need it to extend their payment breaks.
“If they are, the Government must ensure the banks do not charge any additional interest, or allow any interest to accrue, during the payment break period.
“This will only heap additional debt on already distressed borrowers, making them pay back more than they would have, had they never been affected by the pandemic.
“I have spoken to borrowers who lost their jobs as a result of the pandemic, took a 6-month payment break and are now being refused alternative repayment arrangements from their banks despite still being out of work.
“A payment break extension without the charging of additional interest would provide real relief to those borrowers that needed it.
“Today I will write to the banks and the Minister for Finance asking that they clarify their position immediately.”