Holly Cairns (Cork South West, Social Democrats)
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176. To ask the Minister for Finance the steps he is taking in response to a mortgage services provider (details supplied) increasing standard variable rates on some loans to 6.5%. [60368/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Central Bank of Ireland advises that Pepper Finance Corporation (Ireland) Designated Activity Company, trading as Pepper Money and Pepper Asset Servicing, is authorised by it as a Retail Credit Firm (RCF). RCFs are required to comply with all relevant requirements of financial services legislation, including the regulatory requirements as set out in the Central Bank's existing codes of conduct and regulations. These include:

- the Consumer Protection Code 2012,

- the Code of Conduct for Mortgage Arrears 2013,

- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Housing Loan Requirements) Regulations,

- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Small and Medium-Sized Enterprises) Regulations 2015 (SME Regulations), - the Fitness and Probity Regime,

- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Minimum Competency Regulations 2017, and

- the Minimum Competency Code 2017.

In addition, RCFs must comply with the Authorisation Requirements and Standards for RCFs. These Standards require that RCFs must be able to demonstrate that they are in a position to conduct their affairs in a manner that ensures the best interests of their customers are protected.

Within this regulatory framework neither the Central Bank nor I as Minister for Finance have a statutory role in approving the level of interest rates that mortgage creditors charge on their loans. Decisions in relation to mortgage lending and loans, including the type of mortgage, the level of interest rates charged on mortgage loans and the basis for the adjustment of the mortgage rate, are commercial decisions for mortgage creditors in line with the terms of the mortgage contract entered into by the mortgage lender.

The factors affecting the decisions of mortgage creditors when setting and where applicable adjusting their interest rates are manifold and can include the costs of offering and managing the loan, including funding costs.  As the Deputy will be aware, since the summer the ECB has increased its main official lending rate by 2% and short-term wholesale interest rates have also increased over this period.

However, the Deputy may wish to note that on 17 November 2022 the Central Bank issued a 'Dear CEO' letter which details the specific actions, as set out in the Consumer Protection Outlook Report, on which financial services firms should take action to avoid consumer harm.

This is framed against the backdrop of a rapidly changing financial services landscape and the responsibility of firms to navigate this change in a manner that places the best interests of consumers at the heart of their commercial decision-making. This includes proactively assessing the risks and consumer impact a commercial decision may pose to new and existing customers and developing comprehensive action plans to mitigate these risks whilst ensuring that customers understand what changes mean for them. 

The Central Bank has advised that it expects that all regulated entities to take a consumer-focused approach in respect of any decision that affects their customers (both existing and new) and to communicate clearly, effectively, and in a timely manner with all customers.