LABOUR’S FINANCE SPOKESPERSON Ged Nash has written to the CEO of Bank of Ireland, after a number of constituents raised concerns over the bank asking them to confirm if their employers were using the employment wage subsidy scheme as part of their mortgage application process. 

Nash told Bank of Ireland’s Francesca McDonagh that ”it is highly irregular for banks to request such information on the financial health of an applicant’s specific employer”.

The Louth TD also said this this amounted to “both unfair and unjustified discrimination against mortgage applicants” on the wage subsidy scheme. 

The bank, however, has said that it is liaising with all customers to understand their circumstances and that it would not be “responsible to provide somebody with a mortgage at a level that they may struggle to afford now or in the future”.

For much of this year, the government had subsidised the wages of hundreds of thousands of workers in the Irish State.

As part of supports rolled out at the beginning of the pandemic, the government’s temporary wage subsidy scheme (TWSS) allowed companies affected by the crisis to draw down money from the government to continue paying employees their salaries.

The government has said the initiative was vital to keep people in a job where otherwise they might not have had one given the sharp, sudden shock of Covid-19 and the restrictions that followed. 

However, mortgage applicants who hadn’t yet reached the point of drawing down their mortgage faced obstacles moving to this step – even if they were working the same job and on the same money during the pandemic.

TheJournal.ie has previously reported how banks refused to proceed to drawdown for many customers – who already had received approval – because they are on the wage subsidy scheme. 

According to the latest figures from the Banking and Payments Federation, mortgage drawdowns across the main retail banks decreased by 32.6% in the third quarter of 2020 compared to the same period last year.

These statistics cannot be wholly linked to this specific issue of the wage subsidy scheme but drawdowns for customers across the industry has fallen since the arrival of the pandemic.

The TWSS appeared on an employee’s payslip and banks required it to be off their payslip for at least three months before proceeding to drawdown.

However, under the government’s replacement scheme for the TWSS – the employment wage subsidy scheme (EWSS) – payslips for those in receipt of the new scheme do not specify if they are on it.

Despite this, constituents of Nash who have attempted to move to drawdown of their mortgage have faced further problems with the banks seeking clarity over whether they’re receiving the wage subsidy. 

In his letter to Bank of Ireland, seen by TheJournal.ie, the Labour TD said: “I am writing to you as it has come to my attention (by way of contact from three individual constituents) that Bank of Ireland (BOI) are requesting information from mortgage applicants to confirm whether or not their salaries are supported through the EWSS.

“As I am sure you are aware, it is highly irregular for banks to request such information on the financial health of an applicant’s specific employer – which is essentially what this aforementioned practice amounts to.

Indeed, I have made contact with Revenue regarding this issue who have confirmed that the employer is not obliged or required to provide an employee with such information regarding the financial health of their organisation. Not only is this practice both unfair and unjustified discrimination against mortgage applicants on the EWSS, but it also sets a deeply worrying precedent in a broader context.

Can you confirm whether or not this is the ongoing policy of Bank of Ireland, and if so, your supposed justification for requesting this information from mortgage applicants?

“I would strongly encourage you to immediately halt this practice and to establish an internal review to uncover the extent by which mortgage applicants on the EWSS have been effected by this irregular action.”

In a separate parliamentary question submitted by Nash to the Department of Finance, Minister Paschal Donohoe said that while he acknowledged the seriousness of the situation for those involved, “what I cannot do is mandate what information is required by regulators and lenders to complete lending sustainability evaluations”. 

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Donohoe said: “It is important to highlight that, as Minister for Finance, I cannot mandate or overrule the internal risk assessment processes in any bank, even one in which the State has a shareholding.

“Furthermore I am specifically precluded from intervening in the case of any individual customer with any bank, even one in which the State has a shareholding. Decisions in this regard are the sole responsibility of the board and management of the banks which must be run on an independent and commercial basis.”

In his reply, the minister also furnished a statement that had been given by Bank of Ireland, in which is stated that the bank is still supporting applications from customers for mortgages at this time.

The bank said: “Where income has changed or where we are aware of potential challenges to a customer’s income as a result of Covid-19, we are liaising with customers to understand their circumstances and assess if these are expected to change again in the future.

This process has always been followed as it wouldn’t be responsible to provide somebody with a mortgage at a level that they may struggle to afford now or in the future.

We engage closely with our mortgage applicants on an ongoing basis to ensure we fully understand their circumstances. As part of this engagement we ask employers to confirm if their employee’s income is supported by a Government scheme due to Covid-19. The Bank does not seek any information about financial support that may be provided to the employer.

A Bank of Ireland spokesperson reiterated many of these points to TheJournal.ie in a statement, adding that the bank is “very conscious of the potential impact of Covid-19 on income levels”.

“We assess each application carefully taking individual customer circumstances into consideration,” the spokesperson said.

“Where customers are progressing mortgage applications and have affordability to do so, the Bank continues to support those applications.”

The spokesperson added that the process of liaising with customers to understand their circumstances includes information in relation to the TWSS and, since 1 September, the EWSS.