Michael McGrath (Cork South Central, Fianna Fail)
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The Government is aware of the pressure that the rising interest rate environment may have on borrowers. I convened a meeting with lenders active in the mortgage market on 31 August of last year. The Central Bank of Ireland, the Insolvency Service of Ireland, the Citizens Information Board and Money Advice and Budgeting Service also attended.

Following this meeting, on 6 September the Banking & Payments Federation of Ireland (BPFI)'s second phase of its Dealing With Debt campaign was launched to highlight new and existing supports available for mortgage customers. One of the initiatives to which I would draw the Deputy's attention is the work between Credit Servicing Firms and MABS on a streamlined customer engagement framework to accelerate the agreement of sustainable repayment plans for customers in financial difficulty.

The consumer protection framework provides the same protections for borrowers regardless of the regulated entity with whom they are dealing, be that a bank, retail credit firm (RCF) or credit servicing firm (CSF). These regulated entities must be authorised and supervised by the Central Bank, and are subject to the full suite of relevant regulatory requirements and financial services legislation, including the Code of Conduct on Mortgage Arrears (CCMA).

There are a broad range of measures in place to protect mortgage holders who are experiencing difficulty with their repayments. The CCMA outlines how a lender must act if a borrower is in or facing mortgage arrears. The CCMA sets out the process that entities must follow when a borrower is experiencing difficulties with their mortgage payments. Due regard must be given to the fact that each case is unique and needs to be considered on its own merits.

Regulated entities must explore all of the options for alternative repayment arrangements (ARAs) in order to determine which ARA, if any, is appropriate and sustainable for a distressed borrower’s individual circumstances. The range of sustainable solutions being offered to consumers has expanded significantly including the use of new ARAs, mortgage-to-rent and personal insolvency arrangements.

The CCMA provides for an appeals mechanism, including where the entity declines to offer an ARA, where the borrower is not willing to enter into the ARA offered or where the entity classifies the borrower as not co-operating. Appeals can ultimately be referred to the Financial Services and Pensions Ombudsman (FSPO).

The CCMA must be complied with under the law and the Central Bank has the power to take enforcement action against any regulated entity which does not act in compliance with the CCMA. The Central Bank continues to supervise compliance with the CCMA and will investigate any issues that arise, including patterns of behaviour which suggest that the CCMA process is not being followed.

Under the CCMA the lender must:

1.Contact the consumer about their mortgage arrears in a timely, clear, and consumer-friendly manner;

2.Get information from the consumer about their financial situation;

3.Assess whether a suitable alternative repayment arrangement can be made; and

4.Resolve the case by offering an alternative repayment arrangement or not.

This CCMA has been designed to protect consumers and regulated lenders are legally obliged to comply with it. The Code requires lenders to:

• Provide dedicated and specially trained staff in their Arrears Support Unit to manage cases. This includes having any meetings with consumers in private and referring them to their online or hardcopy information.
• Follow the Mortgage Arrears Resolution Process (MARP) which sets out how lenders must communicate with consumers, assess their situation with the aim of coming to a resolution. It includes having an appeals process in place so consumers can appeal certain decisions of their lender.

Michael McGrath (Cork South Central, Fianna Fail)
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Small and medium-sized enterprises (SMEs) play a significant role in the Irish economy, representing 99.8% of the total enterprise population in 2021. Additionally, they contributed to 69.2% of the total persons employed in 2021. Their key role in Ireland's economy is why my Department conducts the SME Credit Demand Survey and has been doing so biannually since 2011.

The SME Credit Demand survey is a report of great importance, as it offers valuable insights into the credit availability and demand among SMEs, along with other related issues. This independent and statistically significant survey provides a comprehensive understanding of the credit landscape for SMES.

As the Deputy is aware, the latest SME Credit Demand Survey was published on 27 January 2023 and the full report is available online. Key results include that demand for bank credit has fallen steadily since the series commenced, with requests in the period falling from 39% of those surveyed in September 2012 to 17% in the most recent result (6 months to September 2022).

However, the recent growth in non-bank finance activity as a source of credit for SMEs is a contributing factor. The 5% of SMEs who stated they applied for non-bank finance in the 6 months to September 2022 is notable and reflects a growing market share for this source of finance, with further expected future demand.

The Deputy will be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers and the decisions made by individual lending institutions at any particular time, which are taken by the board and management of the relevant institution. This includes decisions in relation to products and lending. However, there are a number of Government-backed initiatives that have been introduced to assist SMEs and farmers with access to credit.

In relation to those businesses refused credit, the Credit Review was established to assist SMEs and farm borrowers that have had credit applications of up to €3 million refused or an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the banks' internal appeals process.

Two loan guarantee schemes for SMEs were announced in Budget 2023; the Ukraine Credit Guarantee Scheme and the Growth and Sustainability Loan Scheme. These aim to facilitate access to credit at competitive prices in these areas important to SMEs and Government, namely challenges arising from invasion of Ukraine by Russia, growing businesses and investing in sustainability. These credit guarantee schemes are being delivered through the Strategic Banking Corporation of Ireland.

The Ukraine Credit Guarantee Scheme opened for applications on 20 March 2023. This €1.2 billion scheme provides low cost funding to qualifying SMEs, including farmers and fishers and small Mid-Caps affected by the rising costs of carrying out business, resulting from the invasion of Ukraine by Russia. By the end of March 2024, 3,007 loans were approved to the value of €278.7 million; with €238.3 million of this amount drawn down to date.

The Growth and Sustainability Loan Scheme launched on 19 September 2023. This scheme for SMEs, including primary producers and small Mid-Caps, makes €500 million in loan funding available to enable investment in growth and sustainability. A total of 30% of the lending volume under the scheme is reserved for investment in sustainability and energy efficiency. These green loans also attract a special discount interest rate. An amount of 391 applications were approved by the end of March 2024 to the value of €62.8 million, with €32.8 million of this amount drawn down to date.

Michael McGrath (Cork South Central, Fianna Fail)
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The charging of fees is a commercial decision for regulated entities, within the parameters of the regulatory framework.

Under Section 149 of the Consumer Credit Act, 1995 (as amended) (the Act), credit institutions (which includes all banks operating in the Republic of Ireland and retail credit firms since 2022) must notify the Central Bank if they wish to introduce any new customer charges or increase any existing customer charges, in respect of the provision of any of the following services:

• making and receiving payments;
• providing foreign exchange facilities;
• providing and granting credit; or
• maintaining and administrating transaction accounts.

Each notification received by the Central Bank is assessed and robustly challenged in accordance with the specific criteria set out in Section 149 of the Act. The Central Bank may either approve (in full or at lower levels than requested) or reject a credit institution’s application under Section 149.

In fulfilling its statutory role under Section 149, the Central Bank assesses these notifications in accordance with the following specific assessment criteria as set out in the legislation:

• the promotion of fair competition;
• the commercial justification;
• the effect new charges or increases in existing charges will have on customers; and
• passing on costs to customers.

Approvals are issued in the form of a letter of direction and the entity is legally bound to comply with this letter of direction. The letter of direction sets out the maximum amount the credit institution is allowed to charge.

Credit institutions are free to impose any pricing differentials for the service up to the permitted maximum and are free to waive fees at their discretion for commercial or competitive reasons.

The letter of direction also sets out that credit institutions must publish the charges to be imposed on notices, leaflets, and promotional material etc. which should be made available to customers and on the credit institutions website if appropriate (the withdrawal of the fees will also be notified to the relevant customers prior to withdrawal).

Where credit institutions impose fees, provision 4.54 of the Consumer Protection Code (the Code) requires that prior to providing a service to a consumer, regulated entities must provide the consumer with a breakdown of all charges which will be passed on to the customer.

In addition, provision 4.56 of the Code requires regulated entities to display a schedule of fees on their website and in their public offices. Furthermore, the European Union (Payment Services) Regulations 2018 also requires payment service providers to make information available to consumers regarding charges payable by them.

Where a regulated entity intends to introduce new charges or increase any existing charges, under provision 6.18 of the Code, it must give notice to affected consumers of the introduction of any new charges or of increases in charges, specifying the old and new charge, at least 30 days prior to the charge taking effect.

If customers are unhappy with their current account provider for any reason, including cost, they have the right to switch to a different provider. The Central Bank’s switching code (Code of Conduct on the Switching of Current Accounts with Credit Institutions) sets out protections for consumers who switch payment accounts.