Both the Government and the Central Bank of Ireland (Central Bank) are both strongly of the view that the current regulatory framework provides sufficient protections to consumers.
The Code of Conduct on Mortgage Arrears 2013 (CCMA) provides a strong consumer protection framework, aimed specifically at the process to be followed by relevant firms, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner. Banks, retail credit firms and credit servicing firms are all required to comply with the CCMA as a matter of law.
The CCMA sets out the Mortgage Arrears Resolution Process, (MARP), a four-step process that regulated entities must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution
The regulated entity must base its assessment of the borrower’s case on the full circumstances of the borrower including personal circumstances, overall indebtedness, information provided in the Standard Financial Statement, current repayment capacity and past repayment history. In order to determine which options for alternative repayment arrangements (ARAs) are viable for each particular case, the regulated entity must explore all of the options for ARAs offered by that regulated entity.
Where an ARA is offered to the borrower, the regulated entity must inform the borrower of the reasons why the ARA offered is considered to be appropriate and sustainable for the borrower’s individual circumstances. Where the borrower’s circumstances have changed, in line with Provision 40 of the CCMA, any change to the ARA must be appropriate and sustainable for the borrower’s circumstances.
It should be noted that neither I, nor the Central Bank can interfere with the strategy, commercial decisions or the legitimate contractual rights of regulated entities where such firms are complying with their regulatory and contractual obligations. Regulated entities are entitled to rely on their contractual rights and make their own commercial decisions while always adhering to consumer protection legislation.