I have been advised by the Central Bank of Ireland that the calculation of mortgage repayments and mortgage arrears are carried out by regulated entities in line with the terms and conditions of the loan agreement and any alternative repayment arrangement agreed with the borrower respectively.
The Central Bank’s Statutory Codes of Conduct, including the Consumer Protection Code 2012 (the Code) and the Code of Conduct on Mortgage Arrears 2013 (CCMA) do not prescribe how mortgage repayments or mortgage arrears are calculated. However, the CCMA defines ‘arrears’ as “Arrears: arise on a mortgage loan account where a borrower has not made a full mortgage repayment, or only makes a partial mortgage repayment, in accordance with the original mortgage contract, by the scheduled due date.”
The overriding objective of the CCMA is to ensure that fair and transparent processes are in place for borrowers in or facing mortgage arrears 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. Additionally, General Principle 2.1 of the Code states, “A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market.”
I have also been advised by the Central Bank that it has not taken enforcement action under its codes of conduct in respect of the calculation of mortgage repayments. If any regulated entity has incorrectly calculated mortgage repayments, the Central Bank expects that, as an error, it is rectified speedily and accurately. In relation to any error, the Central Bank expects firms to have adequate systems and controls in place and where issues that affect customers arise, they should be addressed and rectified, with the overarching objective of protecting consumers’ interests, including ensuring that they are not left out of pocket.