Joe Costello (Dublin Central, Labour)
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Question 78: To ask the Minister for Finance if he will introduce legislation to ensure that mortgagees who default on their mortgages over the duration of the financial guarantee legislation will not be prosecuted in the courts but will have their loans remortgaged or dealt with in a manner that does not result in loss of home or imprisonment; and if he will make a statement on the matter. [36724/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy may wish to note that the provisions of the Scheme made under the Credit Institutions (Financial Support) Act, 2008, requires institutions covered by the guarantee in Ireland to confirm their compliance with both the Financial Regulator's Consumer Protection Code (CPC) and the Irish Banking Federation's Code of Practice on Mortgage Arrears.

The CPC requires mortgage lenders to undertake suitability assessments before offering a product or service to consumers and requires that a regulated entity must contact the consumer as soon as it becomes aware that a mortgage account is in arrears. It also specifies that the regulated entity must have in place a procedure for handling accounts in arrears and the Financial Regulator's CEO has pointed out that the Financial Regulator considers this to include a requirement that lenders agree a remedial action plan with a borrower where it detects arrears starting to emerge and to try to assist the borrower to manage his or her financial commitments and not allow the situation to worsen. (For details see www.financialregulator.ie.)

In keeping with the principles of the Irish Banking Federation's (IBF) Code of Practice on Mortgage Arrears, member institutions of both the IBF and the Irish Mortgage Council ensure that the question of repossession does not arise until every reasonable effort has been made to find an alternative. We have been informed by the IBF that home repossession in Ireland is, generally, a last resort for the lender. The Code includes provisions for helping customers in financial difficulty and represents a framework within which these lenders agree to operate. The lenders agree under the Code to adopt flexible procedures for the handling of arrears cases, to assist the borrower as far as possible in his / her particular circumstances and recognise in full the provisions of the Consumer Credit Act 1995.

In the light of all of the above I am satisfied that adequate safeguards are in place to address the issues raised by the Deputy.