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

91. To ask the Minister for Finance his views on the Central Bank's review on mortgage-related advertisements with a focus on cash back incentives; the actions he or the Central Bank plan to take to address the findings of the review; his views on whether cash back offers serve a purpose in the mortgage market; and if he will make a statement on the matter. [30923/18]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Central Bank undertook the recent review of mortgage related advertising, with a focus on cash back incentives, to assess whether or not lenders were advertising mortgages with cashback offers in a clear and unambiguous way.

183 advertisements were reviewed for compliance with the advertising requirements in the Consumer Protection Code 2012 (the Code) and the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (S.I. No. 142/2016). In some cases, the same advertisement may have appeared across all formats of advertising reviewed.

As a result of the review, the Central Bank instructed lenders to withdraw or amend c.75% of the advertisements included. In summary, the key findings from the review were:

- Key information and qualifying criteria was not always included in the main body of the advertisements, or indeed in the small print (e.g. whether a current account with the lender was required in order to qualify);

- The content of some webpages was not accurate and/or up to date; and

- The content of some of the advertisements was unclear (e.g. how the cash back incentive was calculated).

Following a public consultation process in 2017, the Central Bank announced changes to the Consumer Protection Code on 20 June 2018 to help consumers make savings on their mortgage repayments, provide additional protections to consumers who are eligible to switch, and facilitate mortgage switching through enhancing the transparency of the mortgage framework. The changes are being made by way of an Addendum to the Code which will take effect from 1 January 2019.

In relation to incentives such as cashback offers, from 1 January 2019 the existing provision 6.12 in the Code will be extended to apply the same protections to all mortgage holders i.e. for new, existing and switching mortgage holders. This is to ensure that consumers have sufficient clarity about the precise nature and scale of the benefit of an incentive to them, including the potential impact of an associated incentive on the cost of their mortgage. Provision 6.12 of the Code requires lenders to provide consumers with information needed to consider the incentive offered. This information must:

a.Quantify the implications for the consumer of availing of the incentive including an indicative cost comparison of the total cost of the existing mortgage if they do not avail of the incentive and the total cost of the mortgage if they avail of the incentive;

b.Clearly set out the length of time during which the incentive will be available;

c.Clearly set out any assumptions used, which must be reasonable and justifiable;

d.Set out the advantages and disadvantages to the personal consumer of availing of the incentive;

e.Include other key information which the personal consumer should have available to them when considering the incentive; and

f.Include a statement that the personal consumer may wish to seek independent advice prior to availing of the incentive.

In relation to incentives, the Central Bank also expects regulated entities to be fully cognisant of robust product oversight and governance arrangements, for example the European Banking Authority Guidelines on product oversight and governance arrangements for retail banking which have applied since 3 January 2017.

It is also important to note that, as Minister for Finance, I have no role in the decision making processes of credit institutions and what products any such institutions wish to provide. This is a commercial matter for each individual credit institution having regard to the relevant legal and regulatory requirements which apply.