Thursday 14 November 2019

MABS forced out of pilot debt scheme by lenders

Fiona Muldoon
Fiona Muldoon

Sarah McCabe

THE government debt agency at the centre of a new debt resolution scheme was forced out by lenders and did not voluntarily leave the scheme.

Weekend reports indicated MABS had withdrawn of its own accord from the Central Bank pilot scheme, in which it had previously been selected to independently advise borrowers.

But the Irish Independent has learned MABS did not drop out by choice and that lenders, not the Central Bank, were unhappy with its part in the process.


"The proposed approach was not acceptable to certain lenders," said a MABS spokesperson. "We were proposing a more holistic approach to debt resolution – we think that's the part that some creditors didn't like."

MABS's removal from the scheme, which has been plagued by delays, is another blow to the pilot programme given that MABS is the state-appointed body for personal finance advice.

Around 750 people are to be part of the scheme, which was announced by the Central Bank's Fiona Muldoon after she failed to get lenders to agree on a common approach to restructuring debts for those in trouble.

Credit unions rather than banks have been its most vocal opponent because it prioritises the repayment of mortgage arrears over other debts. Credit unions fear that they will be forced to write down loans while mortgage repayments will be honoured.

The Central Bank must now select one of two parties to act as independent adviser to borrowers in MABS's place. These are understood to be UK debt charity StepChange, previously known as the Consumer Counselling Service, or a debt collection service.

David Hall, of the Irish Mortgage Holders Association, said it would be a bad move to bring in an outside agency when MABS worked every day with those in mortgage distress.

MABS said yesterday it was still ready to be part of the scheme if the certain lenders opposed to its proposals changed their mind.

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