The chair of the Oireachtas Finance Committee has welcomed the Central Bank's intention to request details on practices surrounding confidentiality agreements between banks and indebted borrowers.

TD Ciarán Lynch said he raised the issue in a letter to governor Patrick Honohan, who has now agreed to seek clarity on the matter.

Mr Lynch said it was an issue of considerable importance and steps should be taken to ensure there was parity in how financial institutions dealt with individuals on the issue of debt.

“I am deeply concerned with the use of confidentiality clauses by lenders as a prerequisite to any discussion with customers. It amounts to a ‘sign before we talk’ provision, which is deeply worrying,” he said in a statement last night.

“I have significant concerns regarding the absence of consistency on this issue across different lenders, with the result that not all distressed mortgage-holders are being treated fairly.

'Weaker end'
"Any inconsistency can only serve to disadvantage distressed borrowers, who are on the weaker end of the borrower-lender relationship."

He said he welcomed the response of Mr Honohan, and his agreement to seek further clarification on “how this practice operates”.

“There are additional concerns regarding the absence of external scrutiny of such agreements. It is my expectation that these concerns will be reflected in the Central Bank’s review of the Code of Conduct on Mortgage Arrears, which will be completed by the end of this month,” said Mr Lynch.

He added that while the interest of the Central Bank was to be welcomed, there was also a need for a full explanation from the banks themselves surrounding their use of such agreements.

Sinn Féin TD Pearse Doherty also welcomed the move last night but noted that the Central Bank had stopped short of saying it would end the practice.

“We have been aware that banks are restructuring mortgages, but that it is arbitrary and they try to keep the details hidden,” he said in a statement.