Michael McGrath (Cork South Central, Fianna Fail)
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118. To ask the Minister for Finance if the Central Bank has issued 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 that have applied to the institution for a loan; and if he will make a statement on the matter. [53783/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I have been informed by the Central Bank that it has not issued any guidance to financial institutions on the consideration of evidence of gambling transactions as part of the loan application process.

The decision to grant or refuse credit is a commercial decision on the part of a regulated entity that must be conducted in accordance with applicable requirements of Irish financial services legislation. These include requirements to conduct a proper creditworthiness assessment.

As I previously said in relation to a similar question last year (reference 23864 of 21 July), 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.

On the issue more generally, 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 interest rate, 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.

It should be noted that the European Communities (Consumer Credit Agreements) Regulations 2010 apply to the provision of certain credit for amounts between €200 and €75,000. Part 2 of the Regulations include an obligation on creditors to assess the creditworthiness of consumers, on the basis of sufficient information obtained from the consumer.