Nicky McFadden (Longford-Westmeath, Fine Gael)
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249. To ask the Minister for Finance the actions being taken to ensure that banks adequately engage with customers in relation to mortgage arrears; and if he will make a statement on the matter. [18906/13]

Michael Noonan (Limerick City, Fine Gael)
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The Central Bank’s Code of Conduct on Mortgage Arrears applies to mortgage lending activities with borrowers in respect of their principal private residence in the State. Compliance with the Code is mandatory on all mortgage lenders regulated by the Central Bank. The Code provides a number of protections to borrowers. These include the establishment of a formal Mortgage Arrears Resolution Process (MARP) to deal with mortgage customers who are in arrears or in pre-arrears, the establishment of a dedicated Appeals Support Unit and a separate internal appeals process by lenders to deal with individuals on a case by case basis. A copy of the Code is available on the Central Bank’s website www.centralbank.ie.

The Central Bank has advised that as soon as a borrower goes into arrears, a lender must communicate promptly and clearly with the borrower to establish in the first instance why the repayment schedule as per the mortgage contract, has not been adhered to. A lender must pro-actively encourage its borrowers to engage with them about financial difficulties which may prevent them from meeting their mortgage repayments. A lender must ensure that all communications about arrears and pre-arrears are provided to the borrower in a timely manner. All information relating to a lender’s handling of arrears and pre-arrears cases must be presented to the borrower in a clear and consumer friendly manner. The language used in communications must indicate a willingness to work with the borrower to address the situation and must be in plain English so that it is easily understood. Legal jargon must be avoided, where possible.

A lender must also prepare and make available to borrowers, an information booklet providing details of its MARP and this must include:

a) an explanation of its MARP, including the alternative repayment measures available to borrowers and outline in general terms, the lender’s criteria for assessing requests for alternative repayment measures;

b) a statement that the borrower will not be required to change from an existing tracker mortgage to another mortgage type;

c) information about the potential availability of relevant State supports such as mortgage interest relief or Mortgage Interest Supplement;

d) relevant contact points (i.e., the dedicated arrears contact points not the general customer service contact points); and

e) reference to relevant website(s) operated by the Money Advice and Budgeting Services (MABS).

The Deputy will be aware that on 13 March the Central Bank announced new measures to address mortgage arrears, including the publication of performance targets for the main mortgage banks and proposed changes to the Code of Conduct on Mortgage Arrears (CCMA). The new approach is aimed at ensuring banks offer and conclude sustainable solutions for their customers in arrears by setting specific performance targets and proposing revisions to provisioning standards. The Central Bank is also updating the CCMA so that it continues to provide protection to customers who cooperate with their bank while facilitating and promoting the resolution of arrears cases. Issues being considered in the review include:

- New safeguards to ensure borrowers are given sufficient warning before being classified as ‘non cooperating’;

- Changes to the contact levels permitted, while ensuring consumers are not subject to harassment;

- Transparency on resolution options so borrowers have a full understanding before making a decision; and

- Consideration on whether there is merit in allowing a lender to move a borrower in arrears off a tracker rate where the lender has offered an alternative arrangement which is more advantageous in the long term.

Further information on the review is available on www.centralbank.ie. The Central Bank expects to publish the revised Code before the end of May.