Dáil Éireann Debate, Tuesday - 8 April 2014
120. Deputy Noel Grealish asked the Minister for Finance if he will confirm that the Central Bank’s code of conduct for business lending to small and medium enterprises is applicable to all buy-to-let properties which are subject to mortgages from regulated bodies; if any other statutory codes are applicable to buy-to-let properties with mortgages; and if he will make a statement on the matter. [16330/14]
View answerI am informed by the Central Bank that the Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code) applies to regulated entities when providing the following credit products within the State to SMEs operating within the State:
- overdrafts;
- loans;
- term loans;
- leasing;
- hire purchase; and
- invoice discounting.
The objectives of the SME Code are to:
- facilitate access to credit for sustainable and productive business propositions,
- promote fairness and transparency in the treatment of SMEs by regulated entities, and
- ensure that when dealing with arrears cases, the aim of a regulated entity will be to assist borrowers to meet their obligations, or otherwise deal with the situation in an orderly and appropriate manner.
In the case of buy-to-lets, a lending institution must consider the capacity in which the customer enters into the 'buy to let' transaction. If the consumer is considered to be acting within his or her business, trade or profession and meets the definition of 'small and medium enterprise' or 'smaller enterprise' contained in the SME Code, the provisions of the SME Code would apply. If the consumer meets the definition of 'consumer', i.e., a natural person acting outside the person's business, the provisions of the Consumer Credit Act 1995 would apply. In addition, the relevant provisions of the Consumer Protection Code 2012 would apply to buy-to-lets for consumers (as defined), including, in the case of personal consumers, the provisions of Chapter 8 relating to arrears handling. The Code of Conduct on Mortgage Arrears (CCMA) would apply to buy-to-lets where the buy-to-let is the only residential property in this State owned by the borrower.
