I propose to take Questions Nos. 120 and 123 together.
The Central Bank Code of Conduct on Mortgage Arrears (CCMA) is a key part of the overall framework to protect and assist people who are experiencing difficulty with a mortgage secured on a primary residence. In particular, the CCMA outlines the process to be followed by relevant firms to ensure borrowers in arrears (or pre-arrears) are treated in a timely, transparent and fair manner by reference to the borrower’s individual circumstances.
The overriding objective of the CCMA is to ensure the fair and transparent treatment of consumers in mortgage arrears (or pre-arrears), and that due regard is had to the fact that each case of mortgage difficulty is unique and needs to be considered on its own merits. The CCMA recognises that it is in the interests of borrowers and regulated firms to address financial difficulties as speedily, effectively and sympathetically as circumstances allow. The CCMA sets out the four-step MARP process that must be followed when dealing with a mortgage arrears case:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution.
Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm. The CCMA includes requirements that arrangements be sustainable and based on a full assessment of the individual circumstances of the borrower. While the CCMA does not prescribe the solution which must be offered in a particular case, it does provide that a regulated entity may only commence legal proceedings for repossession where it has made every reasonable effort to agree an alternative repayment arrangement with the borrower (or his/her nominated representative), and the specific timeframes set out in the CCMA have been adhered to or the borrower has been classified as "not co-operating" under the provisions of the CCMA.
Outside of the CCMA process, the statutory insolvency framework and its various options will also be available to people with unsustainable levels of personal debt. Details on the protections and options available to insolvent debtors under the personal insolvency legislation can be found at isi.gov.ie.
Mortgage and other loans can be sold by Central Bank regulated entities to entities which are not regulated by the Central Bank. However, the Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold to an unregulated firm. The Act provides any loans which are purchased by an unregulated firm must be serviced by a "credit servicing firm" which is authorised by the Central Bank to conduct credit servicing activities. Such credit servicing firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’. Therefore, this ensures that consumers, whose loans have been sold to an unregulated firm, nevertheless maintain the same regulatory protections that they had prior to the sale, including under the various statutory Codes of Conduct (such as the CCMA) issued by the Central Bank.
From the enactment of the 2015 Act, regulated entities are required to comply with the requirements of financial services legislation including the Central Bank’s Statutory Codes of Conduct (including the CCMA, where relevant) in respect of any credit servicing activities (as defined in the Act) it performs. This means that the regulated "credit services firm" must engage with consumers in accordance with these rules including when managing or administering the credit agreement, including:
(a) notifying the relevant borrower of changes in interest rates or in payments due under the credit agreement or other matters of which the credit agreement requires the relevant borrower to be notified,
(b) taking any necessary steps for the purposes of collecting or recovering payments due under the credit agreement from the relevant borrower,
(c) managing or administering any of the following:
(i) repayments under the credit agreement;
(ii) any charges imposed on the relevant borrower under the credit agreement;
(iii) any errors made in relation to the credit agreement;
(iv) any complaints made by the relevant borrower;
(v) information or records relating to the relevant borrower in respect of the credit agreement;
(vi) the process by which a relevant borrower’s financial difficulties are addressed;
(vii) any alternative arrangements for repayment or other restructuring;
(viii) assessment of the relevant borrower’s financial circumstances and ability to repay under the credit agreement,
Or
(d) communicating with the relevant borrower in respect of any of the matters referred to in paragraphs (a) to (c).
