I propose to take Questions Nos. 227 and 228 together.
There is a comprehensive consumer protection framework in place to ensure that Central Bank regulated entities are transparent and fair in all their dealings with borrowers, and that borrowers are protected from the beginning to the end of the mortgage life cycle; for example, through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.
In particular, the Central Bank Code of Conduct on Mortgage Arrears (CCMA) was introduced to ensure that regulated entities have fair and transparent processes in place for dealing with borrowers in or facing arrears on a mortgage which is secured on a primary residence.
The CCMA sets out the process that entities must follow when dealing with a borrower who is in arrears or who facing difficulties with their mortgage payments, and it makes clear that due regard must be given to the fact that each case is unique and needs to be considered on its own merits, and that all cases must be handled sympathetically and positively by the regulated entity with the objective at all times of assisting the borrower to meet his or her mortgage obligations. Central Bank regulated entities must explore all of the options for alternative repayment arrangements (ARAs) offered by that entity, in order to determine which ARA, if any, is appropriate and sustainable for the borrower’s individual circumstances.
Under the CCMA, a regulated entity may only commence legal proceedings for repossession where it has made every reasonable effort to agree a sustainable ARA with the borrower, or where the borrower has been classified as not co-operating.
The CCMA also provides for an appeals mechanism, including where the entity declines to offer an ARA, where the borrower is not willing to enter into an ARA offered, or where the entity classifies the borrower as not co-operating.
If a regulated entity and a co-operating borrower cannot agree on a bilateral arrangement to address a mortgage difficulty under the CCMA framework, the statutory personal insolvency process, including the Personal Insolvency Arrangement option if the borrower has a secured debt (including a debt which is secured on a primary residence), will be available to insolvent borrowers.
Where a creditor's rights under a credit agreement is sold or transferred to another regulated entity, the protections that were available to borrowers prior to the transaction continue to be in place with the new owner. This ensures that consumers whose loans are sold or transferred, maintain the same regulatory protections that they had, 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).
Also it is worth noting that under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018, in such a situation the new holder of the legal title to the credit must also be regulated and must act in accordance with Irish financial services law that applies to ‘regulated financial service providers’.
The Central Bank publishes regular data on the mortgages held by banks and by 'non-banks' (which comprise regulated retail credit and credit servicing firms). The latest available comprehensive data, which is for the end of December 2022, is set out in the Central Bank's Statistical Release on residential mortgage arrears and repossession statistics and it indicates that 115,259 principal dwelling house (PDH) mortgage accounts were held by 'non-banks'. (Separate data published at the end of April by the Central Bank in its paper entitled 'Protecting consumers in a changing landscape' indicates that, around 33,000 of these mortgages are held by what the Central Bank called 'lending retail credit firms' and that the balance of around 82,000 where held by 'non-lending firms').
Of these PDH accounts held by 'non-banks', 23,389 were classified as 'restructured', of which 6,799 were in a 'split mortgage' arrangement. The Central Bank does not publish a breakdown of this mortgage data by county.
The Central Bank has engaged intensively with regulated firms since last year on the operation of specific aspects of the consumer protection framework, including arrears and switching, with a particular focus on how consumers that need, or may need support, can be helped within the regulatory framework.
The Central Bank has advised that firms have responded with additional supports for borrowers and increased operational capacity. This has included proactive contact with vulnerable borrowers, including those at greatest risk of default, and continued provision of supports, including alternative repayment arrangements, to borrowers at risk of arrears.
The Central Bank will continue to engage with firms on areas where consumers could be better supported and where the information or options available to affected consumers could be enhanced.
I have also met with the CEOs of the retail banks and with a number of non-bank lenders and I have emphasised that they should take a consumer focused approach to assist their borrowers at this difficult time and to facilitate and mortgage switching where possible.
More generally, as the Deputy is aware, the total size of Budget 2023 was €11 billion and it contained many measures to assist families with the increased cost of living, including households with a mortgage. Furthermore, last February an extra €1.2 billion was provided to help households and businesses to meet cost of living increases.
