Dáil Éireann Debate, Tuesday - 29 May 2018
159. Deputy Michael McGrath asked the Minister for Finance the position concerning financial institutions adding their legal fees to the arrears of a borrower, including mortgage holders and SME borrowers; the amount of such legal fees incurred by financial institutions that have been added to mortgage and other debt in recent years; and if he will make a statement on the matter. [23170/18]
Amharc ar fhreagraI have been advised by the Central Bank of Ireland that under Provision 14(1)(h) of the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (‘Mortgage Credit Regulations’), the lender must make available to the borrower, on paper or another durable medium, “an indication of possible further costs, not included in the total cost of the credit to the consumer, to be paid in connection with a credit agreement.”
Under Provision 29(2), any charge that a creditor may impose on a consumer arising from the consumer’s default “shall be no greater than is necessary to compensate the creditor for the costs it has incurred as a result of the default.”
Under Provision 11 of the Code of Conduct on Mortgage Arrears (CCMA), lenders are restricted from imposing charges and/or surcharge interest on arrears arising on a mortgage account in arrears, unless the borrower is not co-operating. Under Provision 14, a lender must prepare and make available to borrowers an information booklet with details of its Mortgage Arrears Resolution Process (MARP), which must include with regard to legal proceedings, a statement that, irrespective of how the property is repossessed or disposed of, the borrower will remain liable for the outstanding debt, including any accrued interest, charges, legal, selling and other related costs, if this is the case.
The arrears handling provisions in Chapter 8 of the Consumer Protection Code apply to loans to which the CCMA does not apply. Provision 8.9 provides that in respect of a mortgage, where a third full or partial repayment is missed and remains outstanding and an alternative repayment arrangement has not been put in place, a regulated entity must notify the personal consumer, on paper on another durable medium, of the potential for legal proceedings and proceedings for repossession of the property, together with an estimate of the costs to the personal consumer of such proceedings.
Under the SME Regulations, lenders must prepare and make available to borrowers an information booklet containing an explanation that the regulated entity may be entitled to impose additional fees or charges on borrowers in financial difficulties in accordance with the terms and conditions of the credit facility agreement.
The Central Bank has also informed me that it does not have information on the amount of legal fees incurred by financial institutions as this would be a supervisory matter.
