Firstly, I must confirm to the Deputy that I have no statutory role in relation to the sale of mortgage books by regulated financial institutions. This is a commercial matter for each institution concerned. The Central Bank’s Code of Conduct on Mortgage Arrears applies to mortgage lending activities with borrowers in respect of their principal private residence in the State. Compliance with the Code is mandatory on all mortgage lenders regulated by the Central Bank. The Central Bank has the power to administer sanctions for a contravention of the Code under Part 111C of the Central Bank Act 1942. The Code provides a number of protections to borrowers. These include the establishment of a formal Mortgage Arrears Resolution Process (MARP) to deal with mortgage customers who are in arrears or in pre-arrears, the establishment of a dedicated Appeals Support Unit and a separate internal appeals process by lenders to deal with individuals on a case by case basis. A copy of the Code is available on the Central Bank’s website www.centralbank.ie .
As I stated in the House in answer to Question Number 77 on 20 December 2012, the Code of Conduct on Mortgage Arrears applies to the mortgage lending activities of all regulated financial institutions (except credit unions), operating in the State, including:
- a financial services institution authorised, registered or licensed by the Central Bank of Ireland and
- a financial services institution authorised, registered or licensed in another EU or EEA Member State and which has provided, or is providing, mortgage lending activities in the State.
Where a regulated financial institution sells part, or all, of its mortgage book to another regulated financial institution, the same protections apply to borrowers, namely, the Code of Conduct on Mortgage Arrears and the Consumer Protection Code. Where a regulated financial institution outsources part, or all, of its mortgage book, the same protections apply to borrowers, and the institutions have responsibility for ensuring that these protections are applied by the outsourced company.
However, if the loan book is sold to a financial institution that is not regulated by the Central Bank, then the provisions of Code of Conduct on Mortgage Arrears do not apply.
The Deputy may wish to note that Central Bank is due to commence a review of the Code of Conduct on Mortgage Arrears shortly and a Consultation Paper will be published on the Central Bank’s website.
