The strengthened Code also added in other measures to help provide some breathing space for distressed borrowers such as prohibition on penalty interest – prohibiting lenders from applying penalty interest or arrears charges to borrowers who take part in a mortgage arrears resolution process. This prohibition was introduced on the basis that banks shouldn’t make matters worse and add to arrears problems.
Legally dependent foreign branches, by contrast, are supervised in terms of their solvency solely by the supervisory authority at the domicile of the headquarters but, in terms of their liquidity, also by the supervisory authority in their host country. This requires additional time and effort for submitting reports. Relief could be given particularly by the already-envisaged transition from host-country to home-country liquidity supervision.