Wednesday, 29 July 2020
Department of Finance
128. To ask the Minister for Finance if there has been communication between his Department and the major financial institutions to advocate on behalf of customers in the final stages of draw down of their mortgage who have been informed they cannot proceed due to the fact they have been placed on the temporary wage subsidy scheme by their employer; and if he will make a statement on the matter. [19395/20]
I fully appreciate the concerns you raise at this difficult time about people who are experiencing uncertainty about mortgage applications and drawdowns. My Department is maintaining close contact with the Central Bank of Ireland and Banking and Payments Federation Ireland – the BPFI - as the lending industry works to address the difficulties the Covid-19 situation is causing for both borrowers and lenders. In this context, the Central Bank has advised that it expects all regulated firms to take a consumer-focused approach and to act in their customer's best interests at all times, including during the Covid-19 pandemic. The Central Bank has also advised that it continues to monitor this situation and the impact of COVID-19 very closely to ensure that lenders are continuing to take a consumer-focused approach and are acting in their customers’ best interests at all times. The BPFI has published a Covid-19 support information document which customers can consult, or customers can contact their lender directly, if they have any queries or concerns about the impact of COVID-19 on their mortgage application.
Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Indeed, the CEOs of the three main retail banks assured the Tánaiste, Leo Varadkar T.D., Minister McGrath and me at meetings on the 15th and 16th of July that they are considering applications from and mortgage drawdowns for customers on the Temporary Wage Subsidy Scheme in a balanced way on a case by case basis.
However, within the parameters of the regulatory framework governing the provision of mortgages, the decision to grant or refuse an individual application for mortgage credit is a commercial decision to be made by the regulated entity and it is not appropriate or possible for me to instruct lenders in that regard. Also it may be the case that a loan offer from a lender may contain a condition that would allow the lender to withdraw or vary the offer if, in the lender’s opinion, there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial and contractual decision for the lender.
Regarding the regulations governing mortgage credit, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, which transposed the Mortgage Credit Directive into Irish law, require lenders to make a thorough assessment of the consumer’s creditworthiness. The assessment must take appropriate account of factors relevant to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement and must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate. The Regulations further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower.
However, if a consumer if not satisfied with the way a regulated entity is dealing with his/her mortgage application or drawdown then, under the provisions of the Central Bank Consumer Protection Code, s/he can make a complaint to the lender. If the consumer is still unhappy with the position following the outcome of the internal complaints process, then s/he can make a complaint to the Financial Services and Pensions Ombudsman (FSPO). Clear information on how to make a complaint to the FSPO may be found at this link: