Consultant Zone

Lenders under pressure?

The Central Bank of Ireland (CBI) recently published results for 2012 and preliminary data for the first quarter of 2013, which showed a lower growth rate than expected and suggested a only a ‘muted recovery’ in activity for this year.

Specifically within the banking sector, the report shows improving liquidity and deleveraging, but there remain concerns over asset quality and the lack of profitability which need to be fixed if the sector is to increase its lending capacity. That increase is necessary for a return to sustainable growth, but with persistent rises in mortgage arrears, that seems a distant scenario.

Having issued the Mortgage Arrears Resolution Targets to deal with escalating arrears earlier this year, along with the implementation of the revised Code of Conduct on Mortgage Arrears and the more recent enactment of the Law & Conveyancing Reform Bill, it is clear that lenders have a lot to consider with regard to arrears and collections strategies. If that wasn’t enough, the CBI has just published a consultation paper on proposed revisions to the Corporate Governance Code for Credit Institutions and Insurance Undertakings, the impact of the Personal Insolvency Act will soon be felt as a result of the commencement of practitioner licensing and submissions are currently being sought for the consultation on the regulation of debt management firms.

So lenders already under pressure from potential under resourcing and lack of internal expertise, are increasingly requiring subject matter expert help to ensure they are keeping up to date with all the latest developments and in many cases looking for an external ‘stamp of approval’ to oversee the constant revisions to processes and procedures.

A very recent example of how Rockstead is positively aiding lenders in this space is where, following our CCMA webinar a lender sought an independent review their collection processes. Reviews can incorporate the auditing of collection telephone calls or can be as detailed as a full review including process, policy, regulatory compliance, training effectiveness and credit decisioning to provide the organisation with complete certainty regarding the effectiveness of their collections departments.

Any lender or mortgage servicer looking to re-assure the CBI and other stakeholders that they have controls and proper independent oversight embedded within its business should engage with the only financial services risk experts with a team of local and international experts based in Dublin.