Written Answers Nos. 196-216
197. Deputy Louise O'Reilly asked the Minister for Finance if his attention has been drawn to allegations of abuses of the travel and subsistence payments that is country money within the construction sector; and if his Department is engaging with the Revenue Commissioners to ensure such abuse is brought to an end. [10007/21]
View answerI am advised by Revenue that employees in some sectors, such as the construction industry, may be required to travel to work at different sites. The payment of country money is designed to compensate such employees for expenses incurred travelling varying distances to and from building sites and to cover subsistence expenses.
Country money can be paid without deduction of tax where certain conditions are satisfied, and details of these conditions and the rates of country money which can be paid without deduction of tax, are available on the Revenue website.
The operation of the rules and conditions for the payment of country money is a feature of Revenue’s Audit and Compliance programmes. All records relating to the payment of country money must be retained by the employer and may be examined in the event of a Revenue compliance intervention. If, during the course of a Revenue compliance intervention, an employer is found not to have met the conditions for payment of country money the payments may be subject to tax, interest and penalties as appropriate.
If a person becomes aware of abuse of the payment of country money, they are encouraged to contact Revenue. A report can be made either by letter, e-mail or telephone to the person’s local Revenue office or by completing an online ‘Tax Evasion Report Form’ via the Revenue website. Any information provided is treated as strictly confidential.
198. Deputy Cormac Devlin asked the Minister for Finance if his attention has been drawn to the case of a person (details supplied); if there is mechanism to get back the pandemic unemployment payment the employee would have been eligible for during the time the temporary wage subsidy scheme was being paid; and if he will make a statement on the matter. [10025/21]
View answerThe Temporary Wage Subsidy Scheme (TWSS), which is provided for in section 28 of the Emergency Measures in the Public Interest (COVID-19) Act 2020, operated from 26 March 2020 to 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.
The scheme was introduced as an emergency measure to provide financial support to businesses that were severely impacted by the pandemic and enabled employees whose employers could no longer afford to pay wages receive subsidy payments. The scheme was not intended as a support to employers who employed people for childminding duties nor was it ever implied that it applied to them.
The TWSS operated on a self-assessment basis with the onus on applicants to satisfy themselves that they fully met the eligibility criteria for the scheme and to self-declare to Revenue that they correctly qualified. To assist employers in determining their eligibility, Revenue published very extensive guidance, which clearly set out the qualifying conditions, including the requirement that a minimum 25% decline in business turnover had occurred due to COVID-19 related restrictions.
The provision of childminding duties by an employee on behalf of their employer is not a business activity. A relevant business in the context of the TWSS generally includes manufacturing, buying, selling or supplying goods or services with a view to making a profit, none of which can be associated with employing a childminder. It is also not possible for a person who employs a childminder to meet the ‘25% turnover’ eligibility test as there is no turnover associated with engaging a childminder.
Where an employer incorrectly availed of the TWSS, then Revenue must seek full repayment of the payments made. In doing so, Revenue has assured me that it will work with employers to resolve any repayment difficulties to the greatest extent possible, providing there is meaningful engagement in concluding the matter.
Revenue has confirmed that the person in question has recently engaged with Revenue regarding the TWSS debt owed and has agreed repayment terms by way of adjustments to his future tax credits.
Questions relating to eligibility for the Pandemic Unemployment Payment (PUP) is a matter for my colleague the Minister for Social Protection.
199. Deputy Cormac Devlin asked the Minister for Finance the measures being taken to ensure new businesses established in 2020 have access to the Covid restrictions support scheme (details supplied); if the scheme will be reviewed to ensure these businesses have access to appropriate support; and if he will make a statement on the matter. [10026/21]
View answerThe CRSS is a targeted support for businesses significantly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the Covid-19 pandemic. The support is available to companies, self-employed individuals and partnerships who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D, from a business premises located in a region subject to restrictions introduced in line with the Living with Covid-19 Plan.
Details of CRSS are set out in Finance Act 2020 and detailed operational guidelines, which are based on the terms and conditions of the scheme as set out in the legislation, have been published on the Revenue website at: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf
To qualify under the scheme a business must, under specific terms of the Covid restrictions, be required to either prohibit or significantly restrict, customers from accessing their business premises to acquire goods or services, with the result that the business either has to temporarily close or to operate at a significantly reduced level. A business must be able to demonstrate that, because of the Covid restrictions, the turnover of the qualifying activity (“relevant business activity”) during the period of restrictions will be no more than 25% of the “relevant turnover amount”.
The “relevant turnover amount” is calculated by reference to a business’s average weekly turnover for the relevant business activity in a prior period, the identification of which period depends on whether the business is an “established business” or a “new business”. An established business is a business that commenced trading prior to 26 December 2019. The relevant turnover amount for a “new business”, i.e. a business commenced by a person between 26 December 2019 and 12 October 2020, is based on the average weekly turnover of the business in the period from commencement to 12 October 2020.
A new business who was prohibited from operating due to Government restrictions in a week or weeks in the period from commencement to 12 October, and who can demonstrate to Revenue that the business received no turnover in that week or weeks, can exclude the week or weeks when calculating the average weekly turnover. This ensures periods in 2020, during which a business was unable to operate because of public health restrictions, do not impact negatively on the business’s average weekly turnover and, therefore, on its entitlements under the scheme.
201. Deputy Aindrias Moynihan asked the Minister for Finance the consideration being given to include properties with serious subsidence issues for a local property tax exemption, given that properties with pyrite issues are listed for exemption for the tax; and if he will make a statement on the matter. [10050/21]
View answerThe Finance (Local Property Tax) Act 2012 (as amended) provides that any property that is in use as, or that is suitable for use as, a dwelling house, is liable to the local property tax (LPT). Therefore, the condition of a property is not relevant where the property is actually occupied as a dwelling house.
Where a property is not occupied and is in such bad condition that it is not suitable for occupation as a dwelling house, it is not liable to LPT. I understand that it is not possible for the Revenue Commissioners to provide a prescriptive set of criteria that a property must meet to be treated as not suitable for occupation as a dwelling house. As LPT is a self-assessment tax it is up to a property owner to assess whether a property is liable or not, and to assess the chargeable value of the property where it is liable. In cases where the property owner assesses a property as non-liable due to its being unsuitable for use as a dwelling or assesses a property at a reduced value because of structural issues, Revenue will consider the facts and circumstances of the particular case.
I have no plans to introduce an exemption along the lines suggested by the Deputy.
202. Deputy Thomas Pringle asked the Minister for Finance the outcome of the Ireland Strategic Investment Fund measuring of the carbon footprint of its investment portfolio as part of a wider approach to identify, manage and mitigate climate risk across its portfolio as reported in 2019; and if he will make a statement on the matter. [10086/21]
View answerThe NTMA has advised me that ISIF integrates a wide range of Environmental, Social and Governance (ESG) factors into its investment decisions across the whole of the Fund. Climate change is a critical issue for the Fund. It is embedded as one of ISIF’s five priority investment themes. ISIF envisages investing c. €300 to €500m in climate related projects over the coming years to enable and catalyse Ireland’s delivery on its 2030 targets, and the transition to Net Zero before 2050. To date, ISIF has committed over €365m to climate related projects.
Within its portfolio of investments ISIF is also supporting the transition to a carbon neutral economy by (i) collaborating with the Food and Agriculture sector as it seeks solutions to decarbonise the supply chain (ii) by making its first climate positive investments within its Global Portfolio and (iii) ensuring compliance with the requirements of the Fossil Fuel Divestment Act 2018.
In addition, as part of better understanding Climate Risk, the Fund has been measuring and monitoring a wide range of climate related metrics across both its Global and Irish portfolios for a number of years, including carbon foot printing where data is available.
203. Deputy Thomas Pringle asked the Minister for Finance the number of companies that have applied to access the Ireland Strategic Investment Fund pandemic stabilisation and recovery fund; the number of businesses that applied for assistance; the number that were accepted, declined and appealed, respectively; the value of the assistance provided to date; and if he will make a statement on the matter. [10087/21]
View answerThe NTMA informs me that ISIF publishes bi-annual reporting which contains an update on the status of the operation of the Ireland Strategic Investment Fund, including economic impact reporting. The latest Report available on the ISIF website at the following link (https://isif.ie/uploads/publications/FY-2020-Report-including-H12020-Economic-Impact-Report.pdf) sets out an overview of the Pandemic Stabilisation Recovery Fund engagements, deployment and pipeline as at 31 December 2020.
ISIF dedicated €2bn of its capital to a Pandemic Stabilisation and Recovery Fund (PSRF) which is focused on investing directly in medium and large Irish businesses impacted by COVID and investing indirectly through fund commitments. PSRF has invested over €400 million nationwide across 20 investments spanning multiple sectors since inception and has a pipeline of €600m across a variety of sectors with concentrations in pandemic affected areas (approximately 6 transactions) such as aviation and tourism/hospitality with the balance of transactions skewing towards recovery investments.
204. Deputy Richard Bruton asked the Minister for Finance if his attention has been drawn to the fact that persons who have recovered from Covid-19 are being denied mortgage protection for a period of six months resulting in persons who have paid a deposit on their home being put in a position in which they cannot complete the purchase (details supplied); and if he will make a statement on the matter. [10097/21]
View answerIn most cases, a lender is legally required under Section 126 of the Consumer Credit Act 1995 to make sure that a mortgage applicant has mortgage protection insurance in place before granting a mortgage loan. However, there are certain exceptions where:
- the house in respect of which the loan is made is, in the mortgage lender's opinion, not intended for use as the principal residence of the borrower or of his dependants,
- loans to persons who belong to a class of persons which would not be acceptable to an insurer, or which would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally,
- loans to persons who are over 50 years of age at the time the loan is approved,
- loans to persons who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sufficient sum, in the event of death.
Within this statutory framework it is a matter for mortgage lenders to require that mortgage protection insurance is put in place in the context of mortgage credit and I have no involvement in such commercial requirements. Also it is important to note that I have a remit over the underwriting decisions made by insurers or have the power to direct insurance companies to provide cover to specific individuals or businesses. That is a commercial and operational matter for each particular insurer. This position is reinforced by the EU framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so.
Nevertheless, the Central Bank has advised that in relation to insurance, and in line with previous guidance issued to the insurance industry in March 2020 (https://www.centralbank.ie/docs/default-source/Regulation/consumer-protection/dear-ceo-letter---central-bank-of-ireland-expectations-of-insurance-undertakings-in-light-of-covid-19.pdf), the Central Bank expects that the insurance industry will play its part in protecting its customers during this extraordinary time, to be sensitive to the difficult situation in which many find themselves, and to take steps to support them. At all times, the Central Bank expects firms to consider the customer impact when making decisions and to engage with customers in an open, fair and transparent manner.
Also the Deputy may wish to note that my officials contacted Insurance Ireland, the representative body for insurance providers, on this issue recently. It stated that it is aware of cases where a final decision on applications is being deferred in instances where applicants have displayed symptoms of COVID-19, been referred for, or undergoing COVID-19 testing, or had a positive COVID-19 diagnosis. It is normal practice to defer a decision on any condition in these cases. However, it also stated that is unlikely that once the applicant has fully recovered from an illness that it would have any impact on the policy they are seeking to take out, although this does depend on the individual case and the severity of the impact of the infection.
More generally, the Deputy will also be aware that both Minister of State Fleming and I have consistently and publicly stated that in the context of COVID-19 we expect insurance firms to treat their customers fairly, honestly, and in accordance with the Central Bank’s Consumer Protection Code. The Government will continue to work to protect customers during and after the COVID-19 crisis, and engage with the insurance industry in relation to how it responds to the needs of its customers. This commitment is included in the Programme for Government.
206. Deputy Michael Fitzmaurice asked the Minister for Finance if fishing boats or commercial freight and passenger vessels are exempt from carbon tax; and if he will make a statement on the matter. [10130/21]
View answerI am taking it that the Deputy, in referring to “carbon tax”, is enquiring about the application of Mineral Oil Tax (MOT) to fuel used for fishing boats and for commercial freight and passenger vessels. MOT is an excise duty and is comprised of a carbon and a non-carbon component. The carbon component is often referred to as carbon tax, but it is only one part of the overall tax (MOT) that applies to mineral oils and other fuels used for motor and heating purposes.
Ireland’s excise duty treatment of fuel used for motor and heating purposes is based on European Union law as set out in Directive 2003/96/EC on the taxation of energy products and electricity, commonly known as the Energy Tax Directive. Under this Directive, Member States are obliged to tax motor and heating fuels. However, Member States must exempt from taxation all fuels that are used for navigation within Community waters, other than fuels used for private pleasure navigation. This means that fuels used for sea-fishing and for commercial freight and passenger vessels must be exempt from taxation under the Directive.
In line with Article 14 of the Energy Tax Directive, Ireland’s MOT legislation, set out in Finance Act 1999, provides for fuels used for the purposes of commercial sea navigation, including sea fishing to be exempt from excise duty. Section 100(2)(a) of Finance Act 1999 provides for a full relief from MOT for fuel used for commercial sea navigation, including sea-fishing. I am advised by Revenue that, subject to conditions, this relief is operated by way of remission or repayment through Revenue’s online services. Full details on the operation of this relief are available on Revenue’s website at: https://www.revenue.ie/en/companies-and-charities/excise-and-licences/mineral-oil-tax/remission-or-repayment-of-mot-on-mineral-oil-used/index.aspx.
207. Deputy Cathal Crowe asked the Minister for Finance if the employment wage subsidy scheme will be extended. [10162/21]
View answerThe objective of the Employment Wage Subsidy Scheme (EWSS) is to support all employment and maintain the link between the employer and employee insofar as is possible. The EWSS has been a key component of the Government’s response to the continued Covid-19 crisis to support viable firms and encourage employment in the midst of these very challenging times. To date, subsidy payments of almost €2 billion have been made and PRSI relief worth over €341m granted to over 46,800 employers in respect of over 526,800 employees.
I have been clear that there will be no cliff-edge to the EWSS and, as the Deputy will be aware from announcements made yesterday, it has been decided that the scheme is now to be extended until the end of June 2021.
With the agreement by Government on the revised plan, COVID-19 Resilience and Recovery 2021: The Path Ahead, a cautious and measured approach will be taken as we lay the foundations for the full recovery of social life, public services and the economy. It is therefore appropriate that key business supports should remain in place until the end of the second quarter of 2021.
As the revised plan is implemented, the EWSS will play an important role in getting people back to work as public health restrictions are eased, thereby reducing the numbers dependent on social welfare payments over time, including the Pandemic Unemployment Payment (PUP).
It is likely that continued support will be necessary out to the end of 2021 to help maintain viable businesses and employment and to provide businesses with certainty to the maximum extent possible. Decisions on the form of such support will take account of emerging circumstances and economic conditions as they become clearer.
For those businesses who may need additional support at this time, I would draw attention to the comprehensive package of other business and employer supports that have been made available since the July Stimulus Plan and Budget 2021 - including the Covid Restriction Support Scheme (CRSS), the Credit Guarantee Scheme, the SBCI Working Capital Scheme, Sustaining Enterprise Fund, and the Covid-19 Business Loans Scheme.
The Government remains fully committed to supporting businesses and employers insofar as is possible at this time.
208. Deputy Brendan Smith asked the Minister for Finance if his attention has been drawn to the difficulties encountered by mortgage holders due to substantial increases in interest rates when mortgages were transferred to other financial institutions (details supplied); and if he will make a statement on the matter. [10176/21]
View answerThe Deputy may wish to note that where a mortgage or other loan is sold or transferred the provisions of the Consumer Protection (Regulation of Credit Servicing Firms) Acts of 2015 and 2018 will apply. This provides that any person servicing these loans or who holds the legal title to such loans will, unless it already falls within the regulatory remit of the Central Bank, have to be authorised as a 'credit servicing firm', by the Central Bank. Accordingly, such firms must comply with the financial services law that applies to Central Bank ‘regulated financial service providers’ and this ensures that consumers whose loans are sold or transferred to another firm maintain the same regulatory protections, including under the various Central Bank statutory Codes of Conduct, such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA), which applied prior to the loan sale. Also the contract terms and conditions of the loan will also remain unchanged following a ‘loan sale’, including those terms which govern the adjustment of the interest rate, and the new 'loan owner' will not be able to acquire any additional contractual benefits or rights solely arising from the 'loan sale'. Therefore, any future adjustment of the interest rate on a mortgage following a ‘loan sale’ will be subject to the relevant terms of the mortgage contract and, within that contractual constraint, the setting of the interest rate following a ‘loan sale’ will be a commercial matter for the new ‘loan owner’ or servicer.
However, it should also be noted that in August 2019 the Central Bank wrote to the industry to set out its expectations of all firms in respect of sales, securitisations, purchases and transfers of residential mortgage loans. This letter including expectations in respect of the transfer of alternative repayment arrangements (ARAs) and it indicated that, where a co-operating borrower is complying with the terms of an ARA put in place, and the loan is subsequently sold to another regulated entity, the new regulated entity cannot unilaterally change the loan contract as agreed between the borrower and the original lender. The new regulated entity should continue to honour an ARA in place until review and/or expiry, as appropriate. This includes honouring timelines and terms and conditions for reviews of the ARA.
In addition, the Consumer Protection Code requires that a regulated entity must notify affected personal consumers on paper or on another durable medium of any change in the interest rate on a loan. This notification must include specific information, including details of the date from which the new rate applies, the old and new rate, the revised repayment amount, as well as an invitation for the personal consumer to contact the lender if he or she anticipates difficulties meeting the higher repayments. In relation to variable interest rates, the Code also requires that regulated entities identify the factors which may result in changes to the variable interest rate and clearly outline the criteria and procedures applicable to the setting of the variable interest rate.
Where a borrower experiences difficulties with paying a mortgage on a primary residence, the regulated firm must comply with the requirements of the CCMA. The arrears handling provisions of the Code apply when the loan is not a mortgage loan to which the CCMA applies. Furthermore, if a person is not satisfied with the with the actions of a regulated entity s/he can make a complaint to that entity and if the matter is not resolved at that level s/he can make a complaint to the statutory Financial Services and Pensions Ombudsman (www.fspo.ie).
209. Deputy Jim O'Callaghan asked the Minister for Finance if his Department will carry out a review of policy regarding the temporary wage subsidy scheme with regard to childminders; and if he will make a statement on the matter. [10177/21]
View answerThe Temporary Wage Subsidy Scheme (TWSS), which is provided for in section 28 of the Emergency Measures in the Public Interest (COVID-19) Act 2020, operated from 26 March 2020 to 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.
The scheme was introduced as an emergency measure to provide financial support to businesses that were severely impacted by the pandemic and enabled employees whose employers could no longer afford to pay wages receive subsidy payments. The scheme was not intended as a support to employers who employed people for childminding duties.
The provision of childminding duties by an employee on behalf of their employer is not a business activity. A relevant business in the context of the TWSS generally includes manufacturing, buying, selling or supplying goods or services with a view to making a profit, none of which can be associated with employing a childminder. It is also not possible for a person who employs a childminder to meet the ‘25% turnover’ eligibility test as there is no turnover associated with engaging a childminder.
The TWSS operated on a self-assessment basis with the onus on applicants to satisfy themselves that they fully met the eligibility criteria for the scheme and to self-declare to Revenue that they correctly qualified. To assist employers in determining their eligibility, Revenue published very extensive guidance, which clearly set out the qualifying conditions, including the requirement that a minimum 25% decline in business turnover had occurred due to COVID-19 related restrictions.
There are no plans at this point to revisit the parameters of the TWSS along the lines mentioned by the Deputy.
211. Deputy Michael Creed asked the Minister for Finance if his attention has been drawn to a proposed loan sale by a bank (details supplied); and if he will take steps to ensure that those home loans within this proposal that were the subject of an agreed sale previously to an organisation will be excluded from the sale in order that the holders of these loans can retain their security of tenure in their homes while transferring to a mortgage-to-rent option. [10223/21]
View answerAs the Deputy is aware, as Minister for Finance I have no role in the day to day operations of any bank operating within the State including banks in which the State has a shareholding. I am precluded from intervening on behalf of any individual customer in any particular bank. Decisions in relation to commercial matters are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis. The independence of banks in which the state has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market
Non-performing exposures (NPEs) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the European banking supervisor. In Ireland significant progress has been made across the banking sector in reducing the level of NPEs since the financial crisis mainly through loan by loan restructuring in addition to a number of loan disposals.
Despite this progress, the level of NPEs in the Irish system remains well above the European average and some time ago the supervisory authority tasked the management and board of each institution with developing and implementing a strategy to address this challenge. The banks have no choice but to respond.
You will recall that in 2018 my Department brought forward legislation to ensure that the contractual rights and obligations of a customer are not altered by the sale of a loan and customers will continue to benefit from, and fall under the scope of applicable regulations, whether with their bank or a 3rd party servicing entity. In this regard - the Consumer Protection (Regulation of Credit Servicing Firms) Act ensures that relevant borrowers whose loans are sold are afforded the regulatory protections they had prior to the sale. All of the customer's rights under their existing terms and conditions will remain in place post transfer.
212. Deputy Alan Dillon asked the Minister for Finance if those with a primary medical certificate, as in the case of a person (details supplied), are subjected to the new tax liabilities since Brexit; and if he will make a statement on the matter. [10233/21]
View answerI am informed by Revenue that a person who holds a primary medical certificate is entitled to a remission or repayment of VAT and VRT (up to a certain limit) under the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations. Further information on the scheme is available here.
Following the withdrawal of the UK from the European Union, an import of a vehicle from Great Britain is treated as an import from a third country, i.e. a non - EU country. If a vehicle is imported from Great Britain, the importer is required to complete a customs declaration and pay customs duty, if applicable, and VAT at import prior to presenting the vehicle for registration. In the case of a person who holds a primary medical certificate, the VAT paid on importation may be repaid in accordance with the Scheme.
213. Deputy Rose Conway-Walsh asked the Minister for Finance further to Parliamentary Question No. 146 of 17 February 2021, when payment was given to a company (details supplied); the terms on which payment was provided; and if he will make a statement on the matter. [10250/21]
View answerThe NTMA informs me that ISIF has made an aggregate of €66m investment into Genuity Science, comprised of €5m investment into Genomics Medicine Ireland in October, 2016, which was later acquired by WuxiNextCode, and a €61m investment into WuxiNextCode in November 2018. WuxiNextCode has since been re-named Genuity Science. All investments were made on commercial terms.
214. Deputy Thomas Gould asked the Minister for Finance the way in which betting duty is used to combat the social costs of problem gambling as outlined as a purpose of the duty in his Department's general excise paper 2019, given that no Department has specific funding for combatting problem gambling. [10307/21]
View answerThe purpose of betting duty is to raise revenues for the State and to account for the negative internalities and externalities generated from betting activities – that is the social costs of problem gambling. There is no direct hypothecation of betting duty to particular causes. Rather, revenues raised from betting duty go directly to the Exchequer and are then partly used to fund the Health, Justice and Welfare systems which bear the costs of problem gambling. The existence of betting duty also has an ancillary role in raising awareness of the risks of problem gambling.
216. Deputy Neale Richmond asked the Minister for Finance if he has engaged with an organisation (details supplied) or with individual banks regarding wage subsidy schemes affecting the eligibility for mortgage approval; and if he will make a statement on the matter. [10351/21]
View answerSince the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who are on the Employment Wage Subsidy Scheme (EWSS) on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.
However, there are certain consumer protection requirements which govern the provision of mortgage credit. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which are necessary, sufficient and proportionate.
In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.
Within this regulatory framework, the decision to grant or refuse an application for mortgage credit remains a commercial matter for the individual lender. Also a loan offer may contain a condition that would allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial decision for the lender.
Nevertheless, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. If a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.
