Bernard Durkan (Kildare North, Fine Gael)
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18. To ask the Minister for Finance if lending institutions are in all cases following Government and Central Bank of Ireland advice in their treatment of borrowers, with particular reference to the need to ensure that all avenues are explored with a view to accommodating the borrowers attempts to discharge their debts to the best of their ability and, at the same time, avoid moral hazard, and keeping in mind that circumstances may have changed since the issue of the loans in question and that in some cases such loans were issued on the basis of interest-only repayments; and if he will make a statement on the matter. [1326/16]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that the Central Bank of Ireland's Code of Conduct on Mortgage Arrears (CCMA) provides a strong consumer protection framework to ensure that each borrower who is struggling to keep up mortgage repayments is treated in a timely, transparent and fair manner by lenders. The CCMA recognises that it is in the interests of borrowers and lenders to address financial difficulties as speedily, effectively and sympathetically as circumstances allow.

The CCMA applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders. Furthermore, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 now requires that the CCMA applies to credit servicing firms and an addendum to the CCMA was published during 2015 to reflect this fact. Regulated entities are required to comply with this Code as a matter of law.

I am informed by the Central Bank that in order to determine which options for alternative repayment arrangements are viable in each particular case, a lender must explore all of the options for alternative repayment arrangements that they offer. The CCMA also requires lenders to review an alternative repayment arrangement at appropriate intervals for the type and duration of the arrangement. The lender must also carry out a review of an alternative repayment arrangement at any time, if requested by the borrower.

You will be aware that on 23 June 2015 the Central Bank published the outcome of a themed inspection of lenders' compliance with its statutory CCMA, which found that, overall, lenders have implemented frameworks as required by the CCMA. The Central Bank has confirmed that all lenders that were subject to the CCMA themed inspection provided a response by the deadline of the 30th November 2015, all of which are currently being reviewed. It continues to engage with these lenders as part of it's on-going supervisory engagement to ensure compliance with the Code of Conduct on Mortgage Arrears (CCMA).

In August 2014, the Central Bank of Ireland wrote to mortgage lenders to set out its expectations of them in their engagement and communications with borrowers who have interest-only for term mortgages on primary residences. Lenders were reminded that they should proactively communicate with borrowers about their repayment strategies throughout the term of the mortgage, with a view to identifying risks at an early stage. Where risks are identified, lenders should engage with borrowers in an appropriate and consumer-focussed way and consider options to facilitate the borrower in meeting their mortgage obligations.