Denis Naughten (Roscommon-South Leitrim, Fine Gael)
Link to this: Individually | In context

Question 129: To ask the Minister for Finance the steps he will take to address the financial pressure facing families with mortgage difficulties; the discussions, if any, he has had with Irish Financial Services Regulatory Authority on the issue; and if he will make a statement on the matter. [48335/10]

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

The Deputy will be aware of the Government's commitments to helping families in difficulty with their mortgages and personal debt under the Renewed Programme for Government and in that context the recent work completed by the Mortgage Arrears and Personal Debt Expert Group (Expert Group) which was set up by me last February. The Deputy will also be aware that the Expert Group produced two Reports, an Interim Report published in July 2010 and their Final Report published in November 2010. The Expert Group, which was chaired by Mr. Hugh Cooney, included Mr. Matthew Elderfield, Head of the Irish Financial Services Regulatory Authority as well as other external experts and senior officials from Government Departments. All of the Expert Group's recommendations are listed in Chapter 2 of the Final Report and have been noted by Government. They can be accessed at www.finance.gov.ie. Since the publication of the Reports the Code of Conduct for Mortgage Arrears (CCMA) has been revised by the Central Bank to reflect many of the recommendations of the Expert Group including key recommendations relating to the introduction by all regulated lenders of a standardised Mortgage Arrears Resolution Process (MARP). The most significant changes in the revised CCMA include:

·Borrowers in arrears who co-operate with the Mortgage Arrears Resolution Process (MARP) will not be charged penalty interest charges;

·Harassment of borrowers through unsolicited communications will be outlawed;

·Borrowers in financial difficulties, but not in arrears, will be allowed to come under the MARP. And

·Clarifying the existing 12 month moratorium on legal action in arrears cases. The revised CCMA was published on 6 December 2010 and came into effect on 1 January 2011. The revised CCMA can be accessed at www.centralbank.ie. Lenders are required to comply with the CCMA as a matter of law but have been given a period of six months grace ending on 30 June 2011 to put in place the requisite systems and training of staff necessary to support the implementation of the MARP. In addition the Central Bank has also written to lenders to issue directions under Section 149 of the Consumer Credit Act 1995 which will mean that lenders cannot impose arrears charges or penalty interest on borrowers who are co-operating with the MARP.

The Expert Group's recommendations are intended to be of benefit to both lender and borrower and it is assumed that lenders will cooperate and implement the recommendations or variations of them as soon as possible. Failure to comply with the revised CCMA may result in sanctions under the Administrative Sanctions Framework.

The Deputy may wish to note that in addition to those recommendations being implemented through amendments to the CCMA, other recommendations will require legislative support involving my Department, the Departments of Social Protection (DSP), Environment, Heritage and Local Government (DEHLG), Justice and Law Reform (DJLR).

In the case of my own Department, recommendations to do with the scope and the admissibility in Court of the CCMA will be examined in the context of the preparation of the second Central Bank Bill.

In order to implement those recommendations in relation to the mortgage interest supplement scheme (MIS) changes to both primary and secondary legislation will be required. The Department of Social Protection is currently developing an implementation plan that will set out a framework for the future of the scheme.

New regulations and guidance are currently being developed by DEHLG in the context of the social housing reform programme to provide that housing authorities could disregard the household's current accommodation for the purposes of determining eligibility for social housing support. I am informed that work is ongoing on the development of a new needs assessment process which will allow an earlier trigger point for the social housing needs assessment process to take place where a case has been determined to be unsustainable in the long term, following exploration of all other options. It has already been indicated by the Minister for Justice and Law Reform to the House on several occasions that he intends to give early attention to the Final Report on Personal Debt Management and Debt Enforcement of the Law Reform Commission which was recently published. That Report contains recommendations on comprehensive reform of the system of personal insolvency law in Ireland.

As I have said the Financial Regulator was a member of the Expert Group on Mortgage Arrears and staff in my Department are in regular contact with staff in the Central Bank on matters to do with the implementation of the Expert Group's recommendations.