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Banking Sector

Dáil Éireann Debate, Wednesday - 7 July 2021

Wednesday, 7 July 2021

Questions (50)

Eoin Ó Broin

Question:

50. Deputy Eoin Ó Broin asked the Minister for Finance if his attention has been drawn to the high interest rates being charged by pillar banks in debt related repayment judgements; and if he has taken action to ensure that these interests are fair and do not add additional financial burden on those in debt repayment agreements with their banks. [36571/21]

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Written answers

Neither I nor the Central Bank of Ireland, have a role in prescribing or setting interest rates offered by banks. These are commercial matters and are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis.

It is not entirely clear what the Deputy means when he refers to interest on ‘debt related repayment judgements.’ However, I will say in general terms that the interest rate charged by a creditor should be specified in the credit agreement, irrespective of the type of credit advanced.

In relation to mortgage debt, Provision 11 of the Code of Conduct on Mortgage Arrears (CCMA) (which applies to the mortgage loan of a borrower which is secured by his/her primary residence) states that lenders are restricted from imposing charges and/or surcharge interest on arrears arising on a mortgage account in arrears to which the CCMA applies, unless the borrower is not co-operating.

For arrears not covered by the CCMA, the Consumer Protection Code sets out specific transparency requirements on interest rates and charges where arrears arise on loans (including credit cards) held by a personal consumer. Specifically, the Code requires regulated entities to disclose, on a dedicated section of its website, details on charges that may be imposed on personal consumers in arrears. In addition, the Code provides specific information to be provided to personal consumers where an account remains in arrears 31 calendar days after the arrears first arose. Such information includes the interest rate applicable to the arrears and details of any charges in relation to the arrears that may be applied.

Separately, if the Deputy is referring to the interest charged on judgment debt, this is governed by legislation under the remit of the Minister for Justice. The Courts Act 1981 (Interest on Judgment Debts) Order 2016 (S.I. No. 624/2016) concerns the rate of interest which applies to judgment debt (the amount a court has ordered the debtor to pay to a creditor) once a court order has been given against the debtor and applies until such time as the debt has been satisfied. It’s currently set at 2% per annum, having been reduced from 8%.

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