Michael McGrath (Cork South Central, Fianna Fail)
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132. To ask the Minister for Finance his views on the fact that certain banks in recent years forced loan guarantors (details supplied) to take out life insurance policies in respect of a mortgage for another family member; and if he will make a statement on the matter. [50671/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Central Bank has informed me that a mortgage lender is not obliged to require a guarantor of a mortgage loan to take out such a policy.  However, a mortgage lender is also not prohibited from making an offer of a mortgage loan contingent on the guarantor taking out a life assurance policy. 

The following requirements apply in the case of a borrower:

The Central Bank’s Consumer Protection Code 2012 provides that a regulated entity must not make the sale of a product or service contingent on the consumer purchasing another product or service from the regulated entity.  This provision does not prevent a regulated entity from offering additional products or services to consumers who are existing customers which are not available to potential consumers.

The Consumer Credit Act 1995 provides that mortgage lenders shall arrange, through an insurer or insurance intermediary, a life assurance policy providing in the event of the death of the borrower before the mortgage has been repaid, for payment of the amount of the principal estimated by the mortgage lender to be outstanding in the year in which the death occurs on the basis that payments have been made by the borrower in accordance with the mortgage.

The European Union (Consumer Mortgage Credit Agreements) Regulations 2016, which transpose the Mortgage Credit Directive, provide that if a mortgage lender requires a consumer to hold a policy of insurance related to the credit agreement, the lender must accept a policy selected by the consumer.  This policy may be from an insurance provider different to the preferred supplier of the lender, provided that the policy has a level of guarantee equivalent to the one the lender proposed, and must be no greater than the amount that would be required to guarantee repayment of the outstanding credit or to insure the value of the security.