Dáil Éireann Debate, Tuesday - 20 September 2011
119 Deputy Pearse Doherty asked the Minister for Finance his view on obliging banks who forced customers out of tracker mortgages and onto fixed mortgages or flexi-rates; and his further views on whether there would be any cost incurred to the State as a result of this policy. [24404/11]
Amharc ar fhreagraThe Central Bank's Consumer Protection Code requires entities regulated by the Central Bank to act honestly, fairly and professionally in the best interests of their customers. Regulated entities must not recklessly, negligently or deliberately mislead a customer as to the real or perceived advantages or disadvantages of any particular product or service. In accordance with common rule 12 of the Code, regulated entities have to ensure that all relevant information, and in particular, key information is provided to a consumer in a clear manner. The operation of any agreement between a regulated entity and a consumer must be in accordance with the terms and conditions applying to that agreement. In August 2010, the Central Bank published the findings of an examination of switching practices related to tracker mortgages by lenders and relevant customer communications in relation to products. A number of concerns were identified during the examination about the level of disclosure and transparency when consumers moved from tracker rate mortgages to other forms of mortgages.
As a result of this finding, mortgage lenders were requested to disclose fully, with immediate effect, the impact of any switch from a tracker mortgage rate in all customer communications. Customers must be notified that switching from a tracker rate may mean they will lose the ability to avail of a tracker rate mortgage in the future, where this is the case.
Mortgage lenders have been advised to include new information in all customer communications regarding switching from tracker rate mortgages, for any reason, with immediate effect. This information should include:
indicative comparisons of the cost of monthly repayments of the customer's current tracker rate mortgage and the rates being offered,
details of the advantages and disadvantages of the tracker mortgage rate compared to the other rates being offered.
The examination did not find evidence that customers were being offered incentives to move off tracker rate mortgages. Mortgage lenders have been instructed, by the Central Bank, to give careful consideration before offering any incentives to customers to move from tracker rate mortgages and to notify the Central Bank in advance of any such proposals.
I have been informed by the Central Bank that, where banks and other lending agencies made errors in removing persons from tracker rate mortgages, the Bank expects that such customers have been or will be compensated by the agency in question. The Central Bank will not comment on press reports that certain amounts of compensation have been paid by certain lending agencies.
