The Central Bank has sent out letters to the chief executives of banks and the managers of credit unions setting out its expectations for the treatment of customers availing of Payment Breaks that were made available for those directly impacted by the fallout from Covid-19.
In the letters, the Central Bank said it was focused on ensuring the interests of borrowers affected by Covid-19 are appropriately protected through this "unprecedented stress".
It said it was essential that lenders take "a pro-active and consumer-centric approach" to all issues arising from Covid-19 to protect the interests of their borrowers.
The Central Bank also told banks and credit unions it was imperative that they communicate with borrowers in a fully transparent and clear manner, ensuring that all relevant information is provided at appropriate junctures.
Banks now have four weeks to inform the Central Bank of their plans to deal with the extension of the payment breaks from three months to six months.
They are also asked to provide assessments of all borrowers on payment breaks to ensure that sustainable solutions are identified in a timely manner for those borrowers who are not able to return to paying full capital and interest at the expiry of the payment break.
The Central Bank said the application of payment breaks and the treatment of borrowers in financial distress will continue to receive significant supervisory attention.
"There will be increased engagement to understand and assess the levels of compliance with the expectations and effectiveness of your firm's operating models and capabilities," the bank wrote in today's letters.
Lenders offering the payment breaks include AIB, Bank of Ireland, KBC Bank Ireland, Permanent TSB, Ulster Bank, Finance Ireland, Investec Private Finance Ireland, Dilosk/ICS Mortgages, Lapithus, Link Group, Mars Capital, Pepper and Start.