When
06 December 2023
2:00 PM
Where
Central Bank of Ireland Dockland Campus, North Wall Quay
Summary of meeting
The Central Bank held the third Civil Society Roundtable of 2023 with representatives from a range of civil society organisations on Wednesday 6 December.
The meeting was chaired by Governor Makhlouf and was attended by Deputy Governor for Consumer and Investor Protection, Derville Rowland, Deputy Governor for Monetary and Financial Stability, Vasileios Madouros, and Director for Consumer Protection, Colm Kincaid.
The attending civil society organisations work across a range of areas including social justice, housing, and the rights of older people. The discussion was held under Chatham House rules and this is reflected in the summary of the discussion below.
Governor Makhlouf opened the meeting and, based on the presentation provided to roundtable members in advance of the meeting, asked attendees for their views on access to credit and dealing with debt.
December Civil Society slides
Discussion between Central Bank and attendees
For the main discussion, attendees were asked to consider the following questions:
- What types of credit are the members of the public you represent currently accessing?
- What are the biggest issues they face in relation to credit?
- To what extent are the members of the public you represent faced with debt problems?
- What trends are you seeing in relation to debt?
The discussion touched on a range of issues, which can be broadly summarised as follows:
- The impact of the housing shortage on debt levels
Many attendees agreed that the acute shortage of housing to buy or rent is exacerbating many social groups’ problems with debt, as they are faced with prohibitively high rent levels. Reference was made to the low level of social housing stock in Ireland, relative to other forms of housing, compared to EU norms (9% V 18%).
A number of attendees highlighted the issue of people renting into old age, which will only increase in frequency. It was noted that the social protection system is based on home ownership.
Similarly, many older people still have debt to service when they retire, at a time when their income reduces significantly
- Need to reform Ireland’s insolvency system
Several attendees called for reform of the insolvency regime, to allow consumers with unsustainable debt full resolution in a timely manner. This included mortgage debt. There are also limited channels open to deal with resolving unsecured debt.
It was also claimed that the data provided by non bank lenders (NBLs) and credit servicing firms (CSFs) relating to debt and consumers isn’t accurate.
There were mixed reports on the prevalence of debt issues among the social groups that the attendees represent. Lower socio economic groups with tracker mortgages are experiencing particular pressure since ECB rates have increased. Other indicators referenced by attendees were that 31% of respondents to a recent survey indicated they were struggling with bills.
Attendees reported that a number of groups are having difficulty accessing credit, including older people. There were a number of calls for it to be made easier for lower socio economic groups and older people to access credit.
Another issue highlighted was that many builders developing social and affordable housing are finding it increasingly difficult to access finance. A related issue was the unsustainable debt levels that approved housing bodies were being expected to shoulder in the move to see them provide the majority of new social housing.
- Issues facing mortgage holders
A number of attendees drew attention to the limited options available to NBLs and CSFs who own or operate a mortgage book that has been securitised. This means that the number of alternative repayment arrangements (ARAs) that they are able to offer mortgage holders that are in difficulty is significantly reduced.
- Financial literacy is a major issue
Many attendees said that, based on their experience, significant numbers of consumers don’t fully understand the types of credit, in particular the newer forms of credit like buy-now pay-later (BNPL), that they’re accessing. A related concern is that consumers don’t understand the charges they’re liable for if they don’t make repayments on newer forms of credit like BNPL and personal contract plans (PCPs). Similarly, many older consumers have a low understanding of products like equity release loans.
- The significant economic contribution of older citizens
Several attendees stated that the commonly held view of older people as a “drag” on the economy and society is misplaced, given the fact that people are working to older ages than previously, and the fact that people are aging significantly healthier than previously - there are 1 million people aged over 60.
- High value placed on Central Bank data and analysis.
A number of attendees noted the value of the CBI data to their organisations’ campaigning and work. A call was made for the Central Bank to carry out economic research on key aspects of the over 60 population.
- Current Central Bank work
The Central Bank invited contributions to its current review of high-cost credit providers. Similarly, attendees were encouraged to provide any information relevant to the Bank’s ongoing supervision of regulated firms, NB: unregulated high-cost credit providers/”loan sharks”.
- High value placed on Central Bank data and analysis
A number of attendees noted the value of the CBI data to their organisations’ campaigning and work. A call was made for the Central Bank to carry out economic research on key aspects of the over 60 population.