John McGuinness (Carlow-Kilkenny, Fianna Fail)
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94. To ask the Minister for Finance if his attention has been drawn to the findings of a report by a person (details supplied). [5054/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The report the Deputy is referring to, the Tomlinson Report, was first published in 2017. The Tomlinson Report specifically investigated how SMEs in the UK that were in financial difficulty were treated by a specific financial entity.

In Ireland, since the financial crisis, there has been a series of legislative changes that have equipped the Central Bank of Ireland with an array of investigative, regulatory and enforcement powers to ensure that regulated financial service providers adhere to the requirements of financial services legislation.  

These changes include significantly enhanced powers for the Central Bank to gather information under the Central Bank (Supervision and Enforcement) Act 2013 which broadened the Central Bank's information gathering and authorised officer powers. 

In addition, as the Deputy will be aware, the Central Bank (Individual Accountability Framework) Bill is currently before the Dáil. The objective of this Bill is to provide for greater levels of accountability in the financial services sector. It clarifies the standards of behaviour expected of individuals and firms and aims to help raise standards of behaviour in practice.

The Central Bank proactively regulates the financial system and has issued regulations aimed at protecting SMEs when dealing with regulated firms. These strengthened regulations include the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which came into operation for regulated lenders (other than credit unions) on 1 July 2016 and, in the case of credit unions, on 1 January 2017. 

These revised SME Regulations introduce specific requirements for regulated lenders, including:

- Contacting SME borrowers who have been in arrears for 15 working days;

- Warning SME borrowers if they are in danger of being classified as not co-operating; and

- Expanding the grounds for appeal and setting up an internal appeals panel.

Under the SME Regulations, regulated financial services firms must have a complaints handling procedure in place.  Any complaints against financial institutions should first be discussed with the institution concerned.

I would also note that the Credit Review Office assists SME and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. The participating institutions are AIB, Bank of Ireland, Ulster Bank and Permanent TSB. SMEs can apply to the Credit Review Office after exhausting the internal appeals process in the participating institution. 

Looking forward, the Deputy will be aware that Government approved the report and the implementation of the recommendations of the Retail Banking Review in November 2022. The recommendations of the report include, inter alia, that: “The Central Bank should review and amend the SME Regulations to take account of legislative changes and developments in the revised Consumer Protection Code, particularly digital/online matters, automated decision making and customer charters and service standards. The Central Bank should also review the regulations applicable to guarantees issued by, or on behalf of, SME borrowers.”

Gerald Nash (Louth, Labour)
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95. To ask the Minister for Finance if correspondence from his Department to the Central Bank to which a newspaper article refers (details supplied) will be provided to this Deputy; and if he will make a statement on the matter. [5127/23]

Michael McGrath (Cork South Central, Fianna Fail)
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My Department maintains ongoing and close contact with the Central Bank on matters of mutual interest, including in relation to mortgages.

As the Deputy is aware, the Report of the Retail Banking Review was published in November 2022. One of its recommendations referred to the findings of the recent IMF Financial System Assessment of Ireland and the need to continue to address the issue of mortgage arrears.

In order to advance this particular recommendation, on 16 January 2023, my Department wrote to the Central Bank (and to other relevant State bodies) to obtain information and their views on addressing mortgage arrears.

The letter also referred to the changing interest rate environment and how this is impacting on mortgage interest rates in both banks and non-banks and the measures which can be advanced to protect consumers.   

As the Deputy may be aware, the Governor of the Central Bank, in his online blog of 30 January 2023, has provided information on the composition of the mortgage market in respect of both banks and non-banks and has confirmed that the full consumer protection framework, which protects borrowers from the beginning to the end of the mortgage life cycle, applies irrespective of whether a mortgage loan is held by a bank or non-bank.

As regulator, the Central Bank continues to engage with regulated entities. The Governor has also indicated, whether due to interest rate increases or other factors such as the increase in the cost of living, lenders and servicers must be able to anticipate and identify cases of pre-arrears and draw up and implement procedures for dealing with mortgage borrowers who are experiencing repayment difficulty.

My Department will continue to work closely with the Central Bank on this matter.