Dáil Éireann Debate, Tuesday - 24 July 2018
347. Deputy Catherine Connolly asked the Minister for Finance the steps taken by his Department to ensure that a directly supervised bank (details supplied) complies with its obligations under EU legislation, directives, regulations, guidelines and the Charter of Fundamental Rights of the European Union on arrears and foreclosures; the procedures and or mechanisms in place; and if he will make a statement on the matter. [34914/18]
Amharc ar fhreagraI have been advised by the Central Bank of Ireland that as the information requested and referred to in this parliamentary question is lender specific supervisory information, the Central Bank is not in a position to comment on individual lenders due to confidentiality requirements under Central Bank legislation. The Central Bank has suggested that the information referred to should be requested from the lender detailed in the question.
The Central Bank is responsible for the supervision of conduct of business regulation for regulated entities providing financial products or services to Irish residents. This is conducted through a risk-based approach and includes, inter alia, Consumer Protection Risk Assessments, thematic inspections, desk-based reviews, on-site inspections and ad-hoc trigger-based reviews.
Within the remit of the Central Bank’s responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.
The Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Consumer Protection Framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. The CCMA provides a strong consumer protection framework, requiring relevant firms to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner and that due regard is given to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits.
Banks, retail credit firms and credit servicing firms servicing loans on behalf of unregulated loan owners are all required to comply with the CCMA. 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. It sets out the Mortgage Arrears Resolution Process (MARP), a four-step process that regulated entities must follow:
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 does not prescribe the solution which must be offered. The CCMA includes requirements that arrangements be sustainable and based on a full assessment of the individual circumstances of the borrower and that repossession be used only as a last resort. Borrowers who engage with their lender, therefore, benefit from the protections afforded under the Mortgage Arrears Resolution Process (MARP).
Under the CCMA, a regulated entity may only commence legal proceedings for repossession where it has made every reasonable effort to agree an alternative repayment arrangement (ARA) with the borrowers and other clear requirements are met or the borrower has been classified as not co-operating. During the legal process, borrowers have opportunities to re-engage with lenders to find a solution. In some circumstances, however, loss of ownership may be unavoidable.
The Central Bank has conducted a number of themed inspections on the CCMA since its introduction in 2009.
Details of these themes and the feedback issued can be found at the following link: https://www.centralbank.ie/regulation/consumer-protection/compliance-monitoring/themed-inspections
In June 2015 the Central Bank completed a themed inspection of compliance with the CCMA. The themed inspection included onsite inspections of a number of regulated mortgage lenders to examine the processes in place around certain provisions of the CCMA and the controls lenders have in place to ensure compliance with those processes and the CCMA. The Central Bank released the findings from this work in June 2015. See Press Release for further details: https://www.centralbank.ie/news/article/central-bank-s-themed-inspection-identifies-weaknesses-in-lenders-compliance-with-the-code-of-conduct-on-mortgage-arrears
Deputy, you will be aware that I asked the Governor of the Central Bank to carry out a review of the effectiveness of the CCMA earlier this year and I expect this review to be completed in the coming months.
In relation to prudential matters, all Irish retail banks are supervised through the Single Supervisory Mechanism (SSM). In this regard, the subject retail banks are obliged to ensure they fully comply with all relevant EU guidelines with regards to arrears and foreclosures.
