Dáil Éireann Debate, Thursday - 22 June 2023
97. Deputy Pádraig Mac Lochlainn asked the Minister for Finance his views on the situation facing mortgage holders whose loans are held by vulture funds; and what action could be taken to reintegrate them into the retail banking mortgage market. [30222/23]
View answerResearch has indicated that there is potential for existing mortgage holders to make mortgage savings by switching their mortgage. This is a particularly important consideration at a time of rising interest rates.
In this regard I have met with the CEOs of the retail banks and a number of non-bank lenders where I emphasised that they should take a consumer focused approach to encourage switching where possible.
On behalf of my Department, the Economic and Social Research Institute (ESRI) is currently carrying out work which will inform the development of tools to promote switching. However the ESRI’s work also serves to highlight consumer inertia as a critical issue which deserves further attention.
The Competition and Consumer Protection Commission (CCPC) and Money Advice and Budgeting Service (MABS) also play an important role in informing consumers about the options available to them.
On 6 June, the Banking and Payments Federation of Ireland (BPFI) and MABS announced the expansion of their 2017 BPFI-MABS Framework Agreement for Late-Stage Mortgage Arrears. Going forward, the agreement will include all customers from pre-arrears to late-stage arrears. The BPFI has also launched a new online resource DealingWithDebt.ie, which provides information on the best action to take if customers are experiencing difficulties meeting their mortgage or other repayments. As well as key contacts for lenders and credit servicing firms and independent consumer support bodies.
It is also a priority for me to ensure that the regulatory framework supports borrowers in the mortgage switching process. In the context of the review of the Consumer Protection Code, I have indicated that the Central Bank should review the existing regulatory provisions and consider whether more dedicated mortgage switching resources, such as a standalone mortgage switching code, could better encourage and facilitate switching in the mortgage market.
In that context and the rise in the cost of living more generally, the Central Bank wrote to all regulated firms last November to set out its expectations on how regulated firms should support their customers.
With respect to mortgages, the Central Bank is especially focused on ensuring that firms have the resources and arrangements in place to assess applications from existing and new or switching borrowers in a manner that is timely and based on prudent lending standards applied consistently across all applicants.
The Central Bank is also scrutinizing the switching and lending activity of the retail banks to ensure there is no discrimination based on who a borrower's current creditor is and it has confirmed that the work identified no evidence to date of such discrimination.
I have been informed by the Central Bank that it is of the view that there is more capacity in the system for borrowers to switch than is being availed of – including for borrowers at non-lending firms – although credit criteria will play a role in a borrower’s ability to switch.
The Central Bank’s work includes following-up with firms to see that they use all the protections of the Code of Conduct on Mortgage Arrears to the fullest extent (including with respect to pre-arrears cases). The Central Bank continue to believe that firms can go deeper into their suite of options to support borrowers in, or facing, arrears.
The Central Bank’s work includes both firm-specific and industry-wide engagement on how the system is responding to this challenge.
They are engaging with industry on areas where consumers could be better supported through greater coordination among participants (including with switching) and where the information or options available to affected consumers could also be enhanced.
