Since the COVID-19 situation first arose, I have maintained contact with the BPFI and banks 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 were on the Employment Wage Subsidy Scheme (EWSS) on a case by case basis and that they are taking a fair and balanced approach.
As the Deputy is aware, the EWSS is an economy-wide enterprise support that has played a central role in supporting businesses, encouraging employment and helping to maintain the link between employers and employees. In money terms, the overall support provided to-date (as at 13 January) by EWSS is over €7 billion, comprising of direct subsidy payments of €6.12 billion and PRSI forgone of €956 million to 51,900 employers, in respect of over 706,700 employees.
There are, however, certain consumer protection requirements which govern the provision of mortgage credit to consumers. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a Central Bank regulated mortgage 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 provides 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 regulated 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 and the fact that EWSS legislation enacted by the Oireachtas placed the administration of the scheme under the care and management of Revenue does not change or impact on that position.
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.
It should also be noted that 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. Therefore, if a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit or the drawn down of 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.
Matters in relation to policy and the administration of mortgages provided by local authorities are a matter for my colleague the Minister for Housing, Local Government and Heritage.
