Pearse Doherty (Donegal South West, Sinn Fein)
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Question 135: To ask the Minister for Finance if his attention has been drawn to the fact that Permanent TSB's interest rate on variable rate mortgages are significantly above that of other banks covered by the blanket guarantee; the steps he will take to assist struggling mortgage holders who are at risk of falling into serious arrears as a result of this higher interest rate; and if he will make a statement on the matter. [18318/11]

Michael Noonan (Limerick City, Fine Gael)
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As Minister for Finance, I have no statutory role in the setting of interest rates charged or paid by regulated financial institutions, including the institution mentioned by the Deputy. The Central Bank of Ireland has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. Each institution determines the rate it charges its customers, depending on a number of factors such as cost of funds and commercial considerations (such as competition, risk pricing and the impact on deposit rates).

In February 2011, the Central Bank advised mortgage lenders that it expects them to notify affected consumers, in writing, at least one month in advance of any increases in their standard variable rate. This notification must include:

a) the date from which the new rate will apply,

b) the details of the old and new rates,

c) the revised repayment amount, and

d) an invitation for the consumer to contact the lender if he/she anticipates difficulties meeting the higher repayments.

With regard to consumers in arrears or in danger of getting into financial difficulty and/or concerned about going into mortgage arrears, the revised Code of Conduct on Mortgage Arrears (CCMA) offers increased protections to these consumers. The revised CCMA was issued to mortgage lenders on 6 December 2010 and has been effective since 1 January 2011. It builds on the provisions of the previous version, but includes more detailed requirements, including the establishment of a formal Mortgage Arrears Resolution Process (MARP). Other examples of significant changes are:

- pre-arrears cases must be treated in accordance with the MARP,

- arrears have been defined,

- the primary residences which can be protected by the CCMA have been defined, and

- an appeals process under the CCMA replaces the complaints process under the Consumer Protection Code. The Central Bank has also published a guide for consumers on mortgage arrears 'Mortgage Arrears – A Consumer Guide to Dealing with your Lender' and this is available on the Central Bank website :http://www.centralbank.ie/regulation/processes/consumer-protection-code/Documents/Consumer%20Booklet%20-%20FINAL%20Feb%202011.pdf With regard to monitoring compliance with the consumer protection codes, the Central Bank carries out themed inspections and mystery-shopping exercises. On 1st of July 2011, the Central Bank published the findings of a themed inspection of mortgage lenders which examined compliance with the requirement of the revised CCMA specifically relating to charges on mortgage accounts in arrears, and the related Letter of Direction ('Direction') issued by the Bank. The Direction instructed mortgage lenders to refrain from imposing interest surcharge on arrears and other specific charges arising on a mortgage account in arrears to which the revised CCMA applies and in respect of which a borrower is co-operating reasonably and honestly with the lender in the MARP from 1 January 2011. Provision 9 of the CCMA refers to the restriction on imposing such charges. Lenders were individually notified of the charges to which this Provision applies in the Direction that issued in December 2010. This themed inspection was carried out across six mortgage lenders including credit institutions and retail credit firms. 655 customer mortgage account statements were reviewed during the course of the themed inspection. Further detail can be found at the following link: http://www.centralbank.ie/press-area/press-releases/Pages/CentralBankMonitorsLendersCompliancewiththeRevisedCode.aspx