Michael McGrath (Cork South Central, Fianna Fail)
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60. To ask the Minister for Finance the consumer protection laws, regulations and codes that govern mortgage protection insurance specifically the area preventing mortgage providers from restricting customers to certain insurance companies; and if he will make a statement on the matter. [10164/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by the Central Bank that when an individual(s) applies for a mortgage loan to buy a home, the individual(s) will generally be required to take out mortgage protection insurance. This is a particular type of life assurance taken out for the term of the mortgage and designed to pay it off on the death of the borrower or joint borrower.

In most cases, a lender is legally required under Section 126 of the Consumer Credit Act 1995 to make sure that a mortgage applicant has a mortgage protection insurance before granting a mortgage loan, with some exceptions. These exceptions apply where:

(a) the house in respect of which the loan is made is, in the mortgage lender's opinion, not intended for use as the principal residence of the borrower or of his dependants,

(b) loans to persons who belong to a class of persons which would not be acceptable to an insurer, or which would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally,

(c) loans to persons who are over 50 years of age at the time the loan is approved,

(d) loans to persons who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sum, in the event of death, of not less than the sum referred to in subsection (1).

Under the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (“CMCAR”), lenders are restricted from making the approval of a mortgage contingent on the purchase of another product. These Regulations came into operation on 21 March 2016 on foot of EU legislation in this field, and replaced Provision 3.17 of the Consumer Protection Code 2012 in the case of activities coming within the scope of those Regulations. Regulation 13(1) provides ‘Subject to the provisions of this Regulation, a creditor or mortgage credit intermediary shall not sell, or offer to sell, to a consumer a credit agreement to which these Regulations apply in a package with other distinct financial products or services or conveyancing services, auctioneering services or other services relating to land which that person may require whether or not in connection with the loan where that credit agreement is not made available to the consumer separately’.

In addition, Regulation 13(7) provides that ‘ If a creditor requires a consumer to hold a policy of insurance related to the credit agreement, the creditor shall accept a policy selected by the consumer (and which can be from an insurance provider different to the preferred supplier of the creditor) provided that such a policy has a level of guarantee equivalent to the one the creditor has proposed and in any event shall be no greater than an amount that would be required to guarantee repayment of the outstanding credit or to insure the value of the security. This is without prejudice to the requirements of sections 124, 126 and 127 of the Consumer Credit Act 1995”.