As the Deputy is aware, I have no statutory function in relation to banking decisions made by individual lending institutions at any particular time. This is ultimately a commercial decision for the management team and board of each bank, having due regard to their customers and the impact on profitability. I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure their value as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. A Relationship Framework has been specified that defines the nature of the relationship between the Minister for Finance and each bank. These Frameworks were published on 30 March 2012 and can be found at: http://banking.finance.gov.ie/presentations-and-latest-documents/
The Code of Conduct on Mortgage Arrears (CCMA) stipulates very strict and narrow conditions for any change of a tracker mortgage contract. As the Deputy is aware, the CCMA requires that a lender must not require the borrower to change from an existing tracker mortgage, as part of any alternative repayment arrangement offered, except where:
- all other options, which would retain the tracker rate, have been considered to be unsustainable;
- the arrangement offered is affordable to the borrower;
- the arrangement is a long-term sustainable option.
The Central Bank has reviewed the CCMA and undertook a consultation in relation to the provisions in the CCMA. The revised CCMA was published on 27 June 2013 and came into effect on 1 July 2013.
The CCMA provides an integrated and cohesive package of consumer protection measures for borrowers facing or in mortgage arrears. It reflects the current mortgage arrears situation and seeks to deliver on the following principles, to:
- ensure appropriate resolution of each borrower’s arrears situation;
- ensure that lenders deal with borrowers in a fair and transparent manner;
- support and facilitate meaningful engagement between lenders and borrowers; and
- ensure borrower awareness of the benefits of co-operating with their lender, and the consequences of not co-operating.
With regard to restructuring of mortgage loans, the CCMA requires lenders to explore all of the options for alternative repayment arrangements offered by that lender, for each particular case.
In addition, where an alternative repayment arrangement is offered by a lender, the revised CCMA requires the lender to outline the reasons why the alternative arrangement offered is considered to be appropriate and sustainable, as well as the advantages and any disadvantages or potential disadvantages of any arrangement offered, with regard to the individual circumstances of the borrower.