Michael McGrath (Cork South Central, Fianna Fail)
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200. To ask the Minister for Finance his views on the impact of putting the code of conduct on mortgage arrears on a statutory footing either through primary legislation or secondary legislation by way of regulation; and if he will make a statement on the matter. [21987/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Code of Conduct on Mortgage Arrears (CCMA) is already a statutory Code that was put in place to ensure that lenders have fair and transparent processes in place for dealing with borrowers in or facing mortgage arrears.  Section 117 of the Central Bank Act 1989 provides the Central Bank with the power to impose Codes of Conduct, including the CCMA. 

I am advised by the Central Bank that such codes of conduct are required to be complied with as a matter of law of any regulated entities to whom they apply.   The Central Bank has the power to take action, up to and including enforcement action, against any regulated firm for non-compliance with a Code (for example by imposing a direction on such entity or taking enforcement action under the Central Bank’s Administrative Sanctions Procedure).  

Michael McGrath (Cork South Central, Fianna Fail)
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201. To ask the Minister for Finance if a lender does not have to offer the solutions outlined in paragraph 39 of the code of conduct on mortgage arrears; and if he will make a statement on the matter. [21988/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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I have been advised by the Central Bank of Ireland that Provision 39 of the Code of Conduct on Mortgage Arrears (CCMA) requires that a regulated entity must explore all of the options for alternative repayment arrangements that are offered by that particular regulated entity.  These options may include the types of alternative repayment arrangements outlined in Provision 39 (a) to (l).  However, Provision 39 does not oblige a regulated entity to offer particular alternative repayment arrangements to borrowers.

Provision 40 of the CCMA provides that a regulated entity must document its consideration of each option examined under Provision 39 including the reasons why the option(s) offered to the borrower is/are appropriate and sustainable for his/her individual circumstance and why the option(s) considered and not offered to the borrower is/are not appropriate and not sustainable for the borrower’s individual circumstances.

In turn, Provision 42 provides that where an alternative repayment arrangement is offered by a regulated entity, the regulated entity must provide the borrower with prescribed information, including a clear explanation of how the alternative repayment arrangement works and the reasons why the alternative repayment arrangement(s) offered is considered to be appropriate and sustainable for the borrower, including demonstrating, by reference to the borrower’s individual circumstances, the advantages of the offer for the borrower and explaining any disadvantages.

Provision 45 provides that if a regulated entity does not offer a borrower an alternative repayment arrangement, for example where it is concluded that the mortgage is not sustainable and an alternative repayment arrangement is unlikely to be appropriate, the regulated entity must provide the reasons on a durable medium to the borrower and advise the borrow of the other options available to them, the borrowers right to appeal the decision to the regulated entity’s Appeals Board and that the protections of the MARP no longer apply.

Michael McGrath (Cork South Central, Fianna Fail)
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202. To ask the Minister for Finance if there are provisions in legislation or in the code of conduct on mortgage arrears that stipulates that the lender at the time of a review must honour the existing arrangement in circumstances in which the financial circumstances of a borrower have not changed; and if he will make a statement on the matter. [21989/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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I have been advised by the Central Bank of Ireland that the Code of Conduct on Mortgage Arrears 2013 (CCMA) seeks to ensure that lenders have fair and transparent processes in place for dealing with borrowers in or facing mortgage arrears. All cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his or her mortgage obligations.

The Central Bank expects that where a co-operating borrower is complying with the terms of an alternative repayment arrangement (ARA) and where the borrower’s circumstances have not changed, the terms of the ARA will continue to be honoured. Where the borrower’s circumstances have changed, in line with Provision 40 of the CCMA, any change to the ARA must be appropriate and sustainable for the borrower’s circumstances.

Provision 42 of the CCMA requires that where an alternative repayment arrangement is offered by a lender, the lender must advise the borrower to take appropriate independent legal and/or financial advice and provide the borrower with a clear explanation, on paper or another durable medium, of how the alternative repayment arrangement works.  This explanation must include the frequency with which the alternative repayment arrangement will be reviewed, the reason(s) for the reviews and the potential outcome of the reviews, where:

(i) circumstances improve,

(ii) circumstances disimprove, and

(iii) circumstances remain the same;

Lenders must ensure that any changes to the ARA are proportionate to the change in the borrower’s circumstances.