The local authority mortgage protection insurance (MPI) scheme has applied to all house purchase loans approved by local authorities after 1 July 1986, including the Rebuilding Ireland Home Loan introduced on 1 February 2018.
The Consumer Credit Act 1995 applied conditions on lenders which applied to local authorities as well as commercial lenders. Under section 126 of the Act, the lender is legally required to ensure that a prospective borrower has mortgage protection insurance in place before drawing down a mortgage. Where a lender offers a particular policy, sub-section 2(d) of section 126 of the Act provides that the borrower can source an alternative policy to suit their needs. However, sub-section 2(d) does not apply to local authorities.
One of the conditions of the MPI scheme, which is a group policy, is that it is obligatory for all local authority borrowers who meet the eligibility criteria to join the scheme. Altering this condition would have a negative impact on the scheme and increase the cost for all existing borrowers. A local authority housing loan applicant who is not eligible for the local authority MPI scheme must source a suitable comparable individual MPI policy from the market.
The scheme is subject to periodic review and competitive tendering in accordance with the terms of EU Directives relating to the award of public service contracts. This is to ensure that the most appropriate cover at the best value for money is secured for local authority borrowers over the entire life of their mortgages.
The most recent public procurement competition for the provision and administration of this MPI scheme was conducted by the Office of Government Procurement. The contract resulting from this open tender competition came into effect from 1 January 2017 and is due to expire on 31 December 2020.
