Martin Heydon (Kildare South, Fine Gael)
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Question 87: To ask the Minister for Finance the appeal or redress services if any, available to individuals with good credit ratings and a genuine financial requirement who are declined mortgages or other credit facilities from Irish National Asset Management Agency banks for no genuine or apparent reason; and if he will make a statement on the matter. [10553/12]

Michael Noonan (Limerick City, Fine Gael)
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The decision on whether or not to grant individual mortgages must remain a commercial decision for individual lending institutions. It is important that each lending institution is allowed to assess properly and independently the individual risks that it is considering accepting. Mortgage lending must be undertaken on a sustainable and prudential basis by financial institutions and conform fully with regulatory requirements both in relation to the financial institution itself and also the safeguarding of the consumer's interests. The Central Bank has in place a Consumer Protection Code. This Code applies to all financial institutions regulated by the Central Bank (regulated entities). If a regulated entity is selling a financial product, including a mortgage, to a person who is a "personal consumer" for the purposes of the Code, then the regulated entity may only sell a mortgage product that is suitable for the consumer based on the information that has been supplied by the consumer. Provision 5.9 of the Code requires that prior to offering, recommending, arranging, or providing a credit product to a personal consumer, a lender must carry out an assessment of affordability to ascertain the consumer's likely ability to repay the debt, over the duration of the agreement.

In the case of all mortgage products provided to personal consumers, the results of a test on the personal consumer's ability to repay the instalments, over the duration of the mortgage agreement, on the basis of a 2% interest rate increase, at a minimum, above the interest rate offered to the personal consumer must be ascertained. This test does not apply to mortgages where the interest rate is fixed for a period of five years or more.

In addition, provision 5.13 requires that a regulated entity must take account of the affordability assessment when deciding whether a personal consumer is likely to be able to repay the debt for that amount and duration in the manner required under the credit agreement. A copy of the Central Bank's Consumer Protection Code is available on the Central Bank's website www.centralbank.ie

If a consumer feels that he or she has been improperly treated in relation to the processing of the application for a mortgage, or that he or she has grounds for complaint for some other reason, then a complaint may be made directly to the financial institution concerned. If the consumer is not satisfied with the response received from the institution, there may be grounds to forward the complaint to the Financial Services Ombudsman (FSO), who has statutory powers to investigate complaints against financial service providers. The FSO will only consider a case once the internal complaints procedure within the financial institution concerned has been followed. The Deputy should note however that the FSO will not deal with commercial decisions taken by a financial institution.

The Deputy may also wish to note that small and medium sized enterprises, sole traders and farmers can apply to the Credit Review Office for a review where credit is refused, withdrawn or offered on unreasonable conditions by AIB or Bank of Ireland. These banks have set up formal internal review processes, which must first examine an appeal by a customer. Ulster Bank has also set up an internal appeal process.