Richard Bruton (Dublin North Central, Fine Gael)
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Question 151: To ask the Minister for Finance if he has satisfied himself that the law is flexible enough to allow persons who have their homes repossessed in the course of the current economic climate to continue to be eligible to raise loans, or own property; his views on whether there is a need for a more modern legislative framework in this area; and if he will make a statement on the matter. [37664/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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At the outset I would like to say that it is a particular priority of the Government to ensure as much as possible that difficulties in relation to mortgage arrears do not result in legal proceedings for home repossession. Home repossession should be and generally is the last resort for the lender and the preferred method of dealing with arrears cases should be early intervention. There are several important initiatives in place at this time to assist consumers who have fallen into debt or are in danger of falling into debt. These include:

· The Mortgage Interest Supplement Scheme which provides support for payments of mortgages

· The Money Advice and Budgeting Service (MABS), which is a national, free, confidential and independent service.

· The Irish Banking Federation (IBF) and the Money Advice and Budgeting Service Operational Protocol on consumer debt.

· The Financial Regulator's Consumer Protection Code which sets out requirements that a regulated entity must contact the consumer as soon as it becomes aware that a mortgage account is in arrears and that it must have in place a procedure for handling accounts in arrears.

· The Financial Regulator Code of Conduct on Mortgage Arrears which, amongst other things, stipulates that a regulated institution must wait at least six months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession of a borrower's primary residence.

Furthermore, as part of their recapitalisation scheme, A.I.B. and Bank of Ireland will not commence court proceedings for repossession of a principal private residence until after 12 months of arrears appearing where the customer continues to co-operate with the banks.

As Minister for Finance, I have no function in relation to situations where personal bankruptcy law has been enforced against a person who has had their home repossessed. This is a function of the Minister for Justice, Equality and Law Reform. In situations where personal bankruptcy law does not apply, it is a matter for the individual credit institution as to whether they would be prepared to consider offering further credit in such a scenario. However, any decision they take in this regard must be cognisant of and compliant with exiting prudential and consumer protection legislation.

In this regard, the Consumer Protection Code, introduced in August 2006 and in full operation since July 2007, puts in place consumer protections of suitability and prohibition of unsolicited credit offers. The Code has specific requirements in relation to suitability, requiring that all regulated entities must ensure that any products or services offered to consumers are suitable and that any product recommended is the most suitable product for the consumer. All regulated entities must set out in writing to a consumer why a product or service offered is suitable for that consumer and the reasons why a recommended product is considered to be the most suitable for the consumer. The general principles of the Code require that a regulated entity must:

· Act honestly, fairly and professionally in the best interests of its customers through the integrity of the market; and

· Acts with due skill, care and diligence in the best interests of its customers.

In summary, I am satisfied that the existing legislation within the remit of the Financial Regulator provides sufficient scope for consumers to access credit provided that any such products are deemed suitable for the consumer and otherwise are consistent with the provisions of the Consumer Code. I do acknowledge that the broader area of personal debt management and its legislative framework - an area which relates to the responsibilities of several Government Departments - is one which needs to be looked at. In this regard, the Law Reform Commissions recently published Consultation Paper on Personal Debt Management and Debt Enforcement has made an important contribution to this area and the relevant Departments are presently carefully examining their recommendations.