Thursday, 5 March 2020
Department of Finance
Mortgage Arrears Proposals
77. To ask the Minister for Finance if he is satisfied with the response to date to the industry letter issued to credit institutions, credit servicing and retail credit firms of 23 October 2019 relating to the charging of costs associated with the legal process and other third party charges to borrowers in mortgage arrears; the quantum of such costs that have been reimbursed to customers to date; and if he will make a statement on the matter. [2700/20]
I have been advised by the Central Bank of Ireland (the Central Bank) that it can confirm that it has received responses from all relevant regulated entities to its letter of 23 October 2019. As the Deputy will be aware, the letter related to the practice of charging costs associated with the legal process and other third party charges (the costs) to borrowers in mortgage arrears. In this regard, the Central Bank has confirmed to me that:
1. Applying the costs prior to the conclusion of repossession proceedings and prior to the decision by a Court to award the costs to the regulated entity is not in borrowers’ best interests. Additionally, it is not in the borrower’s best interests to apply the costs prior to settlement between the parties concerned or prior to the borrower being in a position to redeem the mortgage and requesting to do so; and
2. Pursuant to the terms of the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (the ‘CMCAR’), charging interest on the costs at any point is contrary to Regulation 29 (2) of the CMCAR.
Regulated entities are required to conduct their affairs in a manner that ensures that consumers’ interests are protected. The Central Bank recognises that there may be some cases that are more complex than others (such as mortgages that have already been settled) but expects all regulated entities to ensure the best interests of consumers are protected. The Central Bank will continue to challenge regulated entities where consumer focused outcomes are not clearly demonstrated.
Finally, the Central Bank cannot discuss or share individual responses from regulated entities, as in accordance with Section 33AK of the Central Bank Act 1942 (as amended) they cannot disclose the details of any subsequent action(s) that they might take.