Dáil Éireann Debate, Tuesday - 7 July 2020
215. Deputy Ged Nash asked the Minister for Finance his plans to assess the code of conduct on mortgage arrears, including the available suite of alternative repayment arrangements and ensure that it has full legal effect as outlined in the programme for Government; and if he will make a statement on the matter. [14612/20]
View answerI have been advised by the Central Bank of Ireland (the Central Bank) that it is committed to regularly reviewing its statutory Codes and ensuring they remain effective.
The Central Bank first introduced the Code of Conduct on Mortgage Arrears (CCMA) in 2009 in the midst of an economic and employment crisis to provide statutory safeguards for vulnerable, financially-distressed borrowers in arrears or at risk of falling into arrears. Further strengthened in subsequent years, the CCMA, and within it, the Mortgage Arrears Resolution Process (MARP), is just one part of the national policy framework of supports and protections to assist people with mortgage arrears difficulties.
The CCMA is a statutory code issued under Section 117 of the Central Bank Act 1989, which gives the Central Bank the power to draw up, amend or revoke codes of practice and such codes must be complied with by regulated entities. The provisions of the CCMA are legally binding on regulated entities, and the Central Bank has the power to administer sanctions on regulated entities for a contravention of the CCMA under Part IIIC of the Central Bank Act 1942.
The objective of this statutory Code is to ensure that regulated entities have fair and transparent processes in place for dealing with borrowers in or facing mortgage arrears. Due regard must be given to the fact that each case is unique and needs to be considered on its own merits. All cases must be handled sympathetically and positively by the regulated entity, with the objective at all times of assisting the borrower to meet his or her mortgage obligations.
An alternative repayment arrangement (ARA) is a contract that is entered into between the regulated entity and the borrower, and the process for arriving at the ARA is stipulated in the CCMA. Provision 39 of the CCMA requires that in order to determine which options for ARAs are viable for each particular case, a regulated entity must explore all of the options for ARAs offered by that regulated entity. A non-exhaustive list of ARA options which may be included in a regulated entity’s suite is set out within this provision. It is a commercial decision for each regulated entity to determine the suite of ARAs it considers putting in place for borrowers. Any ARA offered to a borrower must be appropriate and sustainable for his/her individual circumstances. The Central Bank cannot interfere in the contractual rights between regulated entities and borrowers such that it could require a regulated entity to consider or put in place specific ARAs for borrowers.
Rather, in regulating conduct of business, the Central Bank seeks to ensure that regulated entities comply with relevant conduct of business rules, including providing consumers with all relevant information, putting in place a process for the management of customers’ financial difficulties and not exerting undue pressure or influences on customers.
The CCMA also requires regulated entities to have an appeals process in place to enable a borrower appeal a decision by a regulated entity, including where the borrower is not willing to enter into an ARA or where the regulated entity declines to offer an ARA. The appeals procedure must inform the borrower of his/her right to refer the matter to the Financial Services and Pensions Ombudsman.
The protection of borrowers in mortgage arrears continues to be a key priority for the Government and the Central Bank. The consumer protection framework provides a significant number of protections and supports for borrowers in or facing mortgage arrears, in recognition of the distress and, in the case of mortgages secured on a borrower’s primary residence, the vulnerability of borrowers at risk of losing their home.
As outlined in the Programme for Government, my Department is committed to assessing the CCMA, including the available suite of alternative repayment arrangements, and ensuring that it has full legal effect.
