Brian Stanley (Laois, Independent)
Link to this: Individually | In context | Oireachtas source

25. To ask the Minister for Finance the measures being taken to deal with very high interest rates being charged by debt management companies and vulture funds; and if he will make a statement on the matter. [16080/25]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Central Bank has put in place a range of measures in order to protect consumers who have or who are taking out a mortgage.

This consumer protection framework, which applies in the same way to all regulated mortgage entities such as banks, retail credit firms and credit servicing firms, seeks to ensure that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle.

Debt Management Firms are a separate type of authorised entity who work on behalf of a borrower, not the lender, and for remuneration give advice about the discharge of debts. The Money Advice and Budgeting Service (MABS) is also available to assist borrowers, and it will provide, without charge, independent money, budgeting and debt advice to households.

Specifically in relation to variable rate mortgage holders, the Central Bank's Consumer Protection Code requires all regulated mortgage creditors to explain to borrowers how their non-tracker variable interest rates have been set and to clearly identify the factors which may result in changes to variable interest rates. The Central Bank has engaged intensively with regulated firms on the operation of specific aspects of the consumer protection framework to ensure that regulated firms: have enhanced the supports available to borrowers in or facing arrears; have sufficient operational capacity in place to manage applications by borrowers to switch their mortgage or mortgage provider, and that there is no discrimination against borrowers based on where they currently hold their mortgage; and that changes in mortgage interest rates are in line with mortgage terms and conditions, the published variable rate policy statements of the relevant firms and the regulatory framework for which the Central Bank is responsible.Also, the mortgage industry has introduced a number of measures to support borrowers who wish and are in a position to switch their mortgage. This includes the provision of an aligned industry wide set of initial eligibility criteria to facilitate people switching their mortgage from a non-bank to a bank. In order to be eligible to switch under these guidelines, customers need to be making full capital and interest repayments on their mortgage and to meet other eligibility criteria.

More recently the BPFI has launched a website, entitled 'it's in your interest', for borrowers to further encourage and assist mortgage switching. However, the decision on whether or not to provide credit in any particular case, or the amount of credit to provide, remains a commercial matter for an individual lender. The Government has also introduced a mortgage tax credit to assist borrowers who experienced an increase in interest rates.

In addition, it also expects all mortgage creditors to act in the best interests of their customers and, now that official interest rates are declining, to keep their lending rates under review and my Department will continue to liaise with the regulator and the industry on this matter.