Pearse Doherty (Donegal, Sinn Fein)
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141. To ask the Minister for Finance the policy of the State-backed banks in applying discounts to foreign earnings when assessing a mortgage application; and if he will make a statement on the matter. [23962/16]

Michael Noonan (Limerick City, Fine Gael)
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Individual credit policy and lending criteria are in the first instance a matter for the boards and management of each of the individual institutions. 

I am advised by AIB that the bank applies a 20% stress factor on the currency exchange rate to mitigate against currency risk as part of the banks' mortgage assessment process. The gross income as converted using the 20% stress factor is then applied in the assessment of the mortgage application. Furthermore, in circumstances whereby a customer derives part or all of their income from a non Euro currency and this income is used in the mortgage assessment process and/or if a customer resides in an EEA country outside the Eurozone, AIB monitors currency exchange rate fluctuations for these new credit mortgage agreements. In cases whereby the exchange rate fluctuates by 20% or more, AIB issues a communication to impacted mortgage customers to advise them of the potential currency risk. AIB have informed me that the bank complies with the requirements set out in the EU Mortgage Credit Regulation, which came into effect on 21 March 2016.

I am advised by permanent tsb that they have amended its policy in respect of the application of discounts to foreign earnings when assessing mortgage applications pending a broader review of the issue following the recent introduction of the EU Mortgage Credit Regulation. At present under this amended policy, I am informed that  the Group excludes non-Euro income from the credit assessment for mortgages.  This has been done in order to avoid potentially serious exchange rate challenges impacting on the affordability of mortgages for customers and also ensures compliance with the MCD criteria relating to Foreign Currency Loans.

In relation to BOI the bank has responded to a recent Parliamentary question relating to features of its products that "Disclosures to the market in relation to Bank of Ireland products and services are provided in the Bank of Ireland Group Annual Results. Bank of Ireland is regulated by the Central Bank of Ireland."

Pearse Doherty (Donegal, Sinn Fein)
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142. To ask the Minister for Finance his views on the Central Bank or his department placing a cap on the discount applied to foreign earnings by banks to encourage returning emigrants; and if he will make a statement on the matter. [23963/16]

Michael Noonan (Limerick City, Fine Gael)
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Under Section 149 of the Consumer Credit Act, 1995 (as amended), the ('Act') a credit institution must submit a notification to the Central Bank for approval if they wish to introduce any new customer charge or increase any existing customer charge, for certain services. The provision of foreign exchange facilities, as the Deputy is referring specifically to, is covered by this Act.

The proposed charges are assessed by the Central Bank in accordance with the criteria laid down in the legislation as follows:

The promotion of fair competition;

The commercial justification submitted in respect of the proposal;

The impact new charges or increases in existing charges will have on customers; and

Passing on costs to customers.

A notification made under Section 149 may include multiple charges and, having considered and robustly challenged the proposed charge(s) under the assessment criteria, the proposed charges may be rejected, approved at lower levels than requested by the credit institution or approved in full.

Approvals are issued in the form of a Letter of Direction that sets out the maximum amount the credit institution is allowed to charge for the relevant service. The credit institution is legally bound to comply with this Letter of Direction.

Credit institutions are free to impose any pricing differentials for the service up to the permitted maximum and are free to waive fees at their discretion.

Given the existing robust approval process for any proposed charge for the provision of foreign exchange services and the maximum cap for charges, I do not believe a further capping measure is required at this time.