Dáil Éireann Debate, Wednesday - 31 March 2021
70. Deputy Pearse Doherty asked the Minister for Finance the engagement he has had with mortgage lenders regarding mortgage applicants unable to draw down their mortgage loans due to their inability to secure mortgage protection insurance on health grounds in the context of Covid-19; if he has discussed their ability to waive this requirement under section 126 of the Consumer Credit Act 1995; and if he will make a statement on the matter. [17180/21]
View answerI wish to ask the Minister what engagements he has had with mortgage lenders regarding applicants who have not been able to draw down their mortgage. I refer to individuals who have conditions that may make them more susceptible to adverse outcomes if they contract Covid-19. They are not being provided with mortgage protection insurance. In some cases, they have paid a deposit for a house. They have been pre-approved for a loan from the bank but the bank is not letting them draw down that loan. What engagement has the Minister had on this?
When a person applies for a mortgage loan to buy a home, he or she will generally be required to take out mortgage protection insurance. In 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. This is an important statutory provision designed to protect the borrower's dependants and their home should the borrower die before the mortgage has been repaid. However, the Act also recognises that in certain cases such protection is not necessary or would be inappropriate and it provides for a number of limited exemptions to this statutory obligation, such as where the borrower belongs to a class of persons and other exemptions.
I do not play a role in the mortgage and insurance issues raised by the Deputy, which relate to commercial decisions made by banks. However, I am aware that this is an issue. It has been raised by a number of constituents and other Deputies, as well as by the Deputy, in recent days and weeks. While I cannot instruct the banks with regard to this, I will engage with them on it. In what is a difficult time for so many, these decisions can become even harder. I cannot instruct the banks with regard to this but I will engage with them on it and see if I can bring any further clarity to the issue for the Deputy.
I thank the Minister for that and ask that he would also raise it in his engagements with the insurance industry. Indeed, some of the banks own some of the insurance companies providing mortgage protection insurance. Bank of Ireland, for example, has its own insurance company, which is not providing mortgage protection cover to anybody who had symptoms of Covid-19 over the past three months. It is putting those applications on hold for at least a month. The provision in section 126 exists for a reason. It does not exist in Britain, for example, but I believe it is important because it provides protection for families. As the Minister said, however, there is provision for exemptions and that needs to be used, particularly in cases where families thought they had bought their house. They paid their deposit and knew that the mortgage had been approved but they fell at the very last hurdle. Not only did they fall, they lost the house and the deposit. The law allows banks to make an exemption and that must be impressed upon them. I encourage the Minister to engage with the banks on this matter and urge the Minister of State, Deputy Fleming, to engage with the insurance industry on it. The Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has written to the banks and insurance companies on the matter.
The Deputy made an important point. There is a reason exemptions are provided for in section 126 of the relevant law. I appreciate that many families are in difficult circumstances because of the effects of this disease on them and many others and this issue is dealing them an even harsher blow. I must be precise here because I do not want to mislead the Dáil. I cannot instruct the banks on how to handle this particular matter. That said, I do appreciate the distress it is causing and I am planning to understand the matter further with the banks, particularly why individual decisions are being made, and to see if there are any policy consequences.
I appreciate that. My last point may be a matter more specifically for the Minister of State, Deputy Fleming. The banks can give exemptions. We all know why they want this protection and rightly so but the insurance industry needs to look at its policies now, particularly with regard to people who have diabetes. This is the most prevalent issue in the cases coming into our offices. If a person has diabetes, many of the providers are putting his or her application on hold, some for six months and others, such as Royal London, for 12 months. That needs to be addressed in the context of where we are with Covid.
I assure the Deputy that in the engagement that the Minister of State, Deputy Fleming, is having with our leading insurance providers on the matters we covered earlier in the debate, he is planning to raise that particular issue.
That concludes this session.
