Fianna Fáil Finance spokesperson Michael McGrath has stated that the key test of the new targets being imposed by the Central Bank in relation to mortgage arrears will be the sustainability of the solutions put in place.

Deputy McGrath is querying the suitably of the requirement that just 75% of arrangements must have their terms met and has suggested that the figure needs to be higher.

He was speaking following an instruction by the Central Bank which obliges banks to offer 80% of persons in mortgage arrears a solution proposal by the end of the third quarter with a further requirement for agreements to be concluded in respect of 40% of cases. There has been no change in the stipulation that the terms of 75% of arrangements must be met.

Deputy McGrath stated: "There is no doubt that after a long wait we are now seeing activity in relation to this problem of mortgage arrears. However, I am not convinced that as yet we are seeing the appropriate solutions being put in place.

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"We need to move beyond a box ticking culture whereby the banks are motivated by doing what is necessary to get the Central Bank off their back to one where we actually are fixing problems and ensuring they do not reoccur.

"To put it simply, any arrangement that sees a customer quickly falling back in to arrears is a waste of time. There has already been a tendency for banks to push people towards arrangements that are in the banks' interests rather than the customer.

"Last year the proportion of arrangements which involved arrears capitalisation increased from 12.2% to 22%. This is the least sustainable of all solutions as shown by the Central Bank data. Of the accounts to which arrears capitalisation was applied, over 40% per cent are not meeting the new terms.

"Simply adding the outstanding arrears to the capital without addressing the underlying why the customer got in to arrears in the first place is a recipe for further problems down the line.

"We cannot allow the banks to dictate the nature of solutions that are put in place especially when the evidence suggests that the options favoured by the banks are not the ones that are in the best interests of customers and wider society. We also need far greater consistency in how borrowers are being treated by different banks."

(CD/JP)