untreated, whether sustainably or not. for example, bis central bankers ’ speeches of 98, 000 personal dwelling home ( pdh ) accounts more than 90 days in arrears at end june, fully 74, 000 – or three out of every four – were not yet in an arrangement. why have the banks been so slow in acting? it may be, as many have suggested, that the delay in correcting the legislative defect identified by the dunne judgement did represent a delay – though it should not have deterred non - repossession action. the moratorium, and the ccma restrictions designed to prevent harassment by debt collectors, likely have contributed to some delay, but have also been used as excuses. in any event, the moratorium and other ccma rules have now been streamlined in such a way as to retain sufficient protections for distressed borrowers – a legitimate and important objective – while generating little or no obstacle to efficiently organised collection procedures. the legislative defect identified in the dunne judgement has also eventually been corrected, as was recommended by the central bank. more important has been the fact that the task required a much more focused and effective organisational effort at scale than the banks at first realized, a deficiency which they have been progressively overcoming, since we started to audit and critique their procedures more intensively in 2011. i believe that there is also a gap between the analysis of the central bank and that of some of the banks with regard to the need for clarity and predictability about the solutions being proposed. the central bank wants to be sure that there is sufficient clarity about the arrangement, for example in regard to the treatment of the borrower ’ s liability for the shortfall in a loan following an assisted sale or repossession, or for the warehoused part of a split mortgage. some of the banks have expressed the opinion that a degree of uncertainty about how these elements will be treated could help ensure that the bank recovers as much as possible. the central bank believes to the contrary that, with such a widespread systemic problem of debtor distress, greater clarity on what is residually owed in these circumstances is safer for the lender in guarding against any erosion of the debt servicing culture, as well as helping a broader restoration of household confidence which will help the wider economic recovery and through that boost loan recoverability. in particular, the central bank regards as unwise the creation of a situation where, because of such uncertainty, the lender and borrower hold inconsistent

be, to insist on debt forgiveness for any particular borrower. relief for an insolvent borrower from indebtedness is determined ultimately through the insolvency procedures for which legislation has so recently been reformed and in a direction which is rightly much more favourable to the insolvent debtor than was previous legislation. the central bank helped to advise on the drafting of this legislation and has been supportive of its aims. use of this legislation will be an important means of ensuring that over - indebtedness problems, especially those involving multiple debtors, can be resolved. but it should be possible for lenders to avoid imposing the costs and delays of a personal insolvency arrangement ( pia ) or bankruptcy on many insolvent debtors, by coming to sustainable negotiated solutions which are better for both borrower and lender. is the split mortgage the central bank ’ s preferred outcome? various types of solution are possible to deal with a situation where the initial repayment promise looks unsustainable. if appropriately designed – and the criteria have been set out in the sustainability guidelines – the split mortgage can be a sustainable solution, depending on the borrower ’ s circumstances. it can allow the lender to take explicit account of future improvements in the borrower ’ s circumstances, while providing the borrower sufficient assurance of affordability now and in the future. but it provides only one of several possible approaches. banks have begun to experiment with other models that can give both them and the borrowers the assurance that the repayment is going to be back on a firm basis. the committee has mentioned an approach outlined by ulster bank, and on the face of it that approach seems to have most of the ingredients needed to be considered sustainable. while the central bank has set out its sustainability guidelines, nobody, least of all borrowers, would be served by the central bank attempting to place a narrow straitjacket preventing innovation around possible solutions within those guidelines. banks are beginning to learn from experience the elements that differentiate an ineffective engagement with their arrears customers, from the kind of engagement that leads to an arrangement which is not only sustainable, but is in fact sustained because it matches the borrower ’ s abilities and motivations. some banks have gone further successfully down this road than others. should the banks be doing more to achieve sustainability? despite all of our efforts, and despite real progress in policies, processes and staffing, far too many arrears cases have still remained