Dáil Éireann Debate, Tuesday - 9 November 2021
145. Deputy Rose Conway-Walsh asked the Minister for Finance if his attention has been drawn to the fact that persons with eating disorders are currently unable to get a mortgage due to the fact that they are being turned down for life insurance, a requirement of all mortgage applications; the steps he is taking to address the issue; and if he will make a statement on the matter. [54313/21]
View answerWhen a person applies for a mortgage loan to buy a home, the person 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 which is 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, as a statutory measure, 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 which would not be acceptable to a life insurer, or would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally. In such circumstances, there is no statutory requirement on a mortgage lender to arrange for mortgage protection insurance. Nevertheless, it may also be the case that, in circumstances where there is no specific statutory obligation on a mortgage lender to arrange for mortgage protection insurance in association with a housing loan, an individual mortgage lender may, as a matter of its own commercial policy, still require a mortgage borrower to put in place such an insurance policy as a condition for obtaining mortgage credit. That would be a commercial decision as opposed to a statutory requirement for an individual mortgage lender and it is not possible for me to instruct lenders on their commercial lending policies or their commercial decisions on any individual mortgage application, including the insurance and other security they require either in respect of the borrower or the secured property in relation to a mortgage loan. While I cannot involve myself in the commercial decisions lenders may make in respect of mortgage applications, I previously wrote to Banking and Payments Federation Ireland (BPFI) for its views and any information it can provide in relation to this particular issue. BPFI indicated in its reply that on an annual basis around 2% of primary home mortgages were provided without the requirement for mortgage protection insurance (utilising one of the exemptions as provided for in section 126 of the Consumer Credit Act) and that on an annual basis only 0.05% of mortgage applications were refused due to the fact that the applicant did not put in place an acceptable policy of mortgage insurance.
The Deputy should also note that if a person is not satisfied with the way a regulated mortgage provider has dealt with them in relation to an application for a mortgage, or they believe that the regulated entity is not following the requirements of the Central Bank’s codes and regulations or other financial services law, including the requirement for the regulated entity to act with due skill, care and diligence in the best interest of its customers, the consumer can also complain directly to the regulated entity and, if they are not satisfied with the response from the regulated entity, the response to their complaint from the regulated entity is required to include details for the borrower on how to refer their complaint to the Financial Services and Pensions Ombudsman.
