The Deputy will be aware that the lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities and that relationship frameworks are in place with the State owned banks which provide that the State will not intervene in the day-to-day operations of the banks or their management decisions. These frameworks are required to ensure that the banks are run on a commercial, cost effective and independent basis to ensure the value of the banks as an asset for the State. In addition, the Deputy will be aware that the Central Bank is independent in the carrying out of its supervisory functions of regulated financial institutions.
The Central Bank's Consumer Protection Code sets down the obligations that regulated entities must fulfil before an offer of a mortgage is made to a borrower, including inter alia, details of the associated interest rate and other costs. Under the same code, lenders are obliged to inform personal borrowers of any proposed changes to the interest rate on a loan. In the case of a mortgage where a revised repayment arrangement has been put in place in accordance with the Code of Conduct for Mortgage Arrears (CCMA), the notification must clearly indicate the revised repayment amount required. All regulated entities must comply with the Consumer Protection Code. However, the Central Bank does not regulate the rate of interest charged by lending institutions.
Generally, the terms governing the interest payable on a mortgage will be provided for in the loan contract. In respect of a mortgage on a primary residence, provision 11 of the CCMA places a restriction on regulated entities 'from imposing charges and/or surcharge interest on arrears arising on a mortgage account in arrears' to which the CCMA applies, unless the borrower is not co-operating. Therefore, I would encourage anyone who is experiencing difficulty in meeting the contractual repayment requirements of their mortgage to engage with their lender to address their difficulty and in turn, I would ask lenders to put in place sustainable repayment arrangements to deal with a mortgage repayment difficulty in the best interests of consumers.
In conclusion I would reassure the Deputy that the CCMA is designed to provide appropriate and effective consumer protection measures and to ensure that borrowers are treated in a fair and transparent manner. It applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders. Lenders are required to comply with all aspects of the CCMA and non-compliance with the CCMA is enforceable against regulated entities by the Central Bank.
