Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 73: To ask the Minister for Finance the present provision agreed with financial institutions to protect persons having difficulty with loan repayments; where a borrower can get assistance if they feel an institution is not applying the code of practice and if further changes are to be agreed for implementation within the code [45748/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Code of Conduct on Mortgage Arrears (CCMA), a statutory Code issued by the Central Bank under Section 117 of the Central Bank Act 1989, sets out requirements for lenders in their dealings with borrowers who are having difficulties meeting their mortgage repayments. Lenders are required to comply with the CCMA as a matter of law and the Central Bank has the power to administer sanctions for a contravention of the CCMA. The lender must keep and maintain adequate records of all steps taken and must produce all such records to the Central Bank upon request. The Deputy will be aware of the Mortgage Arrears and Personal Debt Expert Group which I established in February under the Renewed Programme for Government. The Group submitted an Interim Report in July and a Final Report in November. Many of the recommendations require amendments to the CCMA specifying the steps involved in a Mortgage Arrears and Resolution Process (MARP) and the related obligations of both lenders and borrowers. One of these steps obliges the mortgage lender to provide for a mechanism by which the borrower can submit an appeal against decisions made under the MARP. The amended CCMA is expected to be published by the Central Bank shortly. For borrowers with difficulties meeting payments to regulated financial institutions in respect of all forms of personal debt (other than residential mortgages as referred to above), the Central Bank's Consumer Protection Code (CPC) provides that a regulated financial institution must have in place procedures for handling arrears. The Central Bank is currently carrying out a review of the CPC and, to this end, issued a public consultation paper in October with a draft revised CPC. It is proposed to increase the requirements for regulated financial institutions in relation to their handling of arrears cases. This document is available at www.financialregulator.ie.

At present a borrower, who feels that the provisions of either of the above codes are not being complied with by a regulated financial institution may submit a complaint to the Financial Services Ombudsman. The Financial Services Ombudsman is an independent office established to deal with unresolved consumer complaints about their dealings with financial institutions.

The Deputy will also be aware of the IBF-MABS Operational Protocol on Debt Management, which became fully operational on 28 September 2009 and which has been subscribed to by fourteen Irish Bankers Federation (IBF) members. This protocol sets out a process by which MABS advisors and IBF members that have subscribed to the protocol, agree to approach debt problems experienced by personal customers/clients, on the basis of the following principles:

(a) Examine the debt/arrears situation on its individual merits, as each situation is different and is likely to require different solutions.

(b) Prioritise secured debts over unsecured debt and thereafter prioritise on the basis of consequences for non-payment. Secondary creditors will be treated on an equitable (pro rata) distribution basis.

(c) Consider the customer/client's overall indebtedness in establishing ability to repay; first giving priority to protection of repayment of mortgage or rent for appropriate accommodation and payment for essential utilities such as heat and light and other basic necessities.

(d) Explore, as appropriate, alternative repayment measures, ensuring that the customer/client receives a clear explanation of any alternative repayment arrangements being considered, together with details of any additional interest or administration charges that may arise in the process.

(e) Inform the customer/client as to the full details of the repayment arrangement as well as, in so far as possible, the potential consequences of non-compliance to this and the continued impact on his/her credit rating.

(f) Provide the customer/client with relevant contact details.

(g) Monitor the mutually-acceptable, affordable and sustainable repayment plan that is put in place.