I note that you have previously raised this subject in a Topical Issues Debate on 8th July. At that time I undertook to bring your concerns regarding this issue to the Central Bank and accordingly my Department wrote to the Central Bank on 13th July. In that letter, the Central Bank was asked to revert to you directly in response and also to provide my office with the details of the matter. I understand that the Central Bank wrote to you on this issue on 28th July and they have informed me that their position has not changed since then. The Central Bank have said, in relation to mortgage holders who are not in arrears converting from tracker rates to standard variable rates, that they do not collect data series on this topic. However, they did draw attention to their Economic Letter on Mortgage Interest Rate Types in Ireland and, in particular, a point in time study of one cohort of loans entered into as tracker loans by covered banks. It showed that 4 per cent of them had converted to fixed rates or variable rates since inception.
Furthermore, on the topic of tracker-mortgage related issues, it is worth noting that on 30th September permanent tsb announced that the PTSB Group had established a Mortgage Product Review Group (MPRG) to review the bank's mortgage product suite and to establish if there are any instances where the contractual terms and conditions attached to mortgage accounts are not being fully honoured by the bank and/or whether other material issues such as the provision of key information at relevant times require further examination.
As you will be aware, this follows the identification earlier in the summer of over 1,300 mortgage customers at PTSB and Springboard Mortgages who, following an investigation by the Central Bank of Ireland, were found in particular circumstances to have lost a contractual right to be offered a tracker rate mortgage. This led to a Mortgage Redress Programme announced in late July through which impacted customer accounts are now being returned to the correct position and the bank is paying compensation to the relevant customer accounts holders.
Notwithstanding the considerable work undertaken to ensure consumers are appropriately protected, the Central Bank has informed me that they remain concerned that there may be other tracker-related issues which could be impacting on consumers across the system. In this regard, they are currently engaging closely with a number of lenders on points of concern relating to their ability to demonstrate that they have acted in the best interests of their tracker mortgage customers, with a number of lenders currently undertaking their own internal reviews. The Central Bank has also been engaging with consumer groups as well as the Financial Services Ombudsman to help inform their future work. On 2 October, the Central Bank announced that they had decided that a broader examination of tracker-related issues covering, among other things, transparency of communications with and contractual rights of tracker mortgage borrowers, was warranted. The Central Bank has commenced this examination. I also understand that they have written to lenders notifying them of this.
Turning to mortgage holders who are facing repayment difficulties, as you are aware, the Code of Conduct on Mortgage Arrears (CCMA) provides protections for borrowers in these circumstances. The lender may offer the borrower an alternative repayment arrangement which requires the borrower to change from an existing tracker mortgage to another mortgage type, if the proposed alternative repayment arrangement satisfies the following conditions: all other options, which would retain the tracker rate, have been considered to be unsustainable; it is affordable for the borrower; and it is a long-term sustainable solution which is consistent with Central Bank of Ireland policy on sustainability. In addition, the CCMA requires lenders to explain in the offer letter the reasons 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. Furthermore, and importantly, lenders must engage with the Central Bank on any proposal to avail of provision 46 of the CCMA. This means there are further strong protections in place. The Central Bank has indicated that to date no lender has engaged with it on developing any such products. This was also confirmed in the outcome of the Central Bank's recently published report on its themed inspection on compliance with the code of conduct on mortgage arrears. During this inspection all lenders confirmed that, as a matter of policy, they do not require, and have not required, borrowers to move from a tracker mortgage rate to a more unfavourable rate during the lifetime of the mortgage. If the Deputy is aware of any banks that may have acted improperly, he should bring them to the attention of the Central Bank. While it does not investigate individual consumer complaints, it does welcome information from consumers of financial products.
