Dáil Éireann Debate, Tuesday - 29 January 2019
172. Deputy Michael McGrath asked the Minister for Finance the contingencies in the event vulture funds increase the interest rate on mortgage loans significantly in excess of market rates; and if he will make a statement on the matter. [4205/19]
Amharc ar fhreagraAll mortgage or other loans which are sold or assigned to a new creditor will continue to be subject to the terms of the contract as entered into by the borrower, including the terms which provide for an adjustment to the borrowing rate.
Also, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 provides that all the consumer protections a borrower had prior to a loan sale continue to apply after the loan sale irrespective of the regulatory status of the new creditor. Additionally, the new Consumer Protection (Regulation of Credit Servicing Firms) Act 2018, which came into effect on 21 January 2019, provides that the holder of the legal title to credit, if not already subject to authorisation by the Central Bank, must now be authorised by the Central Bank as a credit servicing firm.
This Central Bank regulatory framework makes clear that the relevant Central Bank statutory codes, such as the Consumer Protection Code and where applicable the Code of Conduct on Mortgage Arrears, will apply to residential mortgages provided to consumers irrespective of the current creditor party to that mortgage agreement. In this context, there are a number of regulatory obligations which are due to the consumer. Firstly, there is an obligation to ensure that the "owner" of the mortgage acts honestly, fairly and professionally in the best interest of its customers.
Furthermore, an addendum to the Consumer Protection Code, which came into effect from 1 February 2017, now requires that a regulated entity (including where applicable a credit servicing firm) must produce a summary statement of its policy for setting each variable mortgage interest rate (excluding a tracker interest rate) which, inter alia:
(I) clearly identifies the factors which may result in changes to the variable interest rate;
(II) clearly outlines the criteria and procedures applicable to the setting of the variable interest rate; and
(III) clearly outlines where the regulated entity applies a different approach to setting the variable interest rate for different cohorts of borrowers and the reasons for the different approach.
There is also a requirement to update this statement when the policy changes.
Furthermore, a regulated entity is also obliged, at least annually, to provide to a variable mortgage interest rate borrower (excluding a tracker interest rate mortgage), inter alia, a summary of other mortgage products offered by the entity which could provide savings for the personal consumer at that point in time and details of how the personal consumer can obtain information on these mortgage products. (There is also a requirement to provide a link to the relevant section of the Competition and Consumer Protection Commission's website relating to switching lenders or changing mortgage type. The most recent addendum to the Consumer Protection Codes, which came into effect on 1 January 2019, further supports the mortgage switching process and, where applicable, also requires lenders to notify borrowers if savings can be made on the mortgage by moving between loan to value interest rate bands. In this context, it should also be noted that the Central Bank macro prudential loan-to-value and loan-to-income residential mortgage lending restrictions do not apply to switcher mortgages).
If a consumer is not satisfied with the way his or her lender is dealing with him or her under the terms of the contract, the consumer protection regulatory framework, the relevant legal framework or more generally, he or she can make a complaint directly to the lender pursuant to Chapter 10 of the Consumer Protection Code, and if the matter cannot be satisfactorily resolved at that point, the borrower can then refer the matter to the Financial Services and Pensions Ombudsman.
