Joe O'Brien (Dublin Fingal, Green Party) | Oireachtas source

I thank Deputy Durkan for raising this issue. The Central Bank has put in place a range of measures to protect customers who take out a mortgage or have another loan.

This consumer protection framework seeks to ensure that all Central Bank regulated entities are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle. This includes, for example, through protections at the initial marketing and advertising stage and assessing the affordability and suitability of the mortgage at a time when borrowers might find themselves in financial difficulties.

This consumer protection framework applies to all Central Bank regulated entities that provide credit to consumers. Also, following the enactment of the Consumer Protection (Regulation of Credit Servicing Firms) Acts of 2015 and 2018, the Central Bank consumer protection framework equally applies to any entity that services or holds the legal title to the rights of a creditor under a mortgage or other credit agreement. Therefore, any entity which purchases a loan or acquires the legal rights of a creditor under a consumer credit agreement will, unless it already has an appropriate authorisation from the Central Bank, be required to be authorised by the Central Bank as a credit servicing firm or retail credit firm. These regulated entities must act in accordance with Irish financial services law and the consumer protection regulatory framework that applies to all Central Bank regulated firms. This means that where a creditor sells or assigns its legal rights under a credit agreement to another creditor, the consumer protections that were available to borrowers prior to such a transaction remain in place. Therefore, the new creditor that acquires the contractual rights and benefits of the creditor will do so based on the terms of the existing loan agreement and the regulatory protections available to consumers. Accordingly, any new creditor will only be able to enforce a credit agreement in accordance with the relevant terms of the particular agreement and the relevant consumer protection framework.

This consumer protection framework is strong and it includes the various Central Bank statutory codes of conduct, such as the consumer protection code and the code of conduct on mortgage arrears, CCMA. In particular, the CCMA provides specific protections to borrowers in arrears or facing a prospect of arrears on a loan secured on a primary residence. Under the CCMA, all relevant regulated entities, such as a bank, retail credit firm or credit servicing firm, must proactively encourage borrowers to engage with it about financial difficulties that may prevent the borrower from meeting his or her mortgage repayments. Also, where a borrower is experiencing repayment difficulty, a regulated entity must explore all of the options for an alternative repayment arrangement, ARA, offered by the entity to determine if a more suitable and sustainable repayment option is available based on the borrower’s individual circumstances. If a borrower is not satisfied with the options proposed, or if the regulated entity declines to offer an ARA, an appeals mechanism is provided for in the CCMA. In addition, a regulated entity must review an ARA at intervals that are appropriate to the type and duration of the arrangement, including at least 30 calendar days in advance of an ARA coming to an end.

The Central Bank has advised that it expects that all regulated entities, including retail credit and credit servicing firms, to take a consumer-focused approach in respect of any decision that affects their customers, both existing and new, and to communicate clearly, effectively and in a timely manner with all customers. In particular, it indicates that the protection of mortgage loan borrowers, including those in arrears, is a key priority and that it will continue to supervise compliance by all regulated entities with the CCMA and consumer protection code and other relevant financial services legislation.

While there has recently been an increase in short-term arrears, it should also be noted that progress is still being made on reducing long-term arrears. As the Deputy will be aware, last week the Central Bank produced its mortgage arrears statistics for the first quarter of 2023. They showed that non-banks hold 76% of all primary dwelling home mortgage accounts in arrears over one year. They also showed that the number of accounts in long-term arrears continues to decline and now stands at a little over 22,000, having been 26,000 in March 2022. This is the lowest level of long-term arrears since the Central Bank started to collect its data on mortgage arrears.

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