Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

263. To ask the Minister for Finance if the Central Bank of Ireland has issued any guidance to financial institutions, in terms of assessing loan applications, on the issue of considering evidence of gambling transactions on the bank statements of persons who have applied to the institution for a loan; and if he will make a statement on the matter. [26258/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The lending institutions in Ireland - including those in which the State has a significant shareholding - are independent commercial entities. I, as Minister for Finance, have no statutory role in relation to how they carry out their business.

The Central Bank 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.

I have been informed by the Central Bank that prior to offering a product or service, a regulated entity must gather and record sufficient information from the consumer appropriate to the nature and complexity of the product or service and must carry out an assessment of affordability to ascertain the personal consumer's likely ability to repay the debt over the duration of the agreement, in accordance with the requirements of the Consumer Protection Code 2012.

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

Where the lender offers an introductory interestrate, it must carry out the 2% interest rate test on the variable interest rate to be applied after the introductory period has ended if known at the time of the offer of the introductory interest rate, or on the current variable interest rate, if the variable interest rate to be applied after the introductory period has ended is not yet known.

I understand that the Central Bank did not specifically refer to evidence of gambling in advising lenders on assessment of repayment capacity.