Léim ar aghaidh chuig an bpríomhábhar

Covid-19 Pandemic

Dáil Éireann Debate, Wednesday - 4 November 2020

Wednesday, 4 November 2020

Ceisteanna (45)

Jennifer Carroll MacNeill


45. Deputy Jennifer Carroll MacNeill asked the Minister for Finance the steps he has taken to date to address situations in which persons in receipt of the employment wage subsidy scheme or other Covid-19-related income supports are facing difficulties in securing mortgage approval, despite no change to the persons wages; and if he will make a statement on the matter. [34061/20]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I have met with the CEOs of the banks on a number of occasions since the pandemic arose to discuss the measures banks and other regulated lenders can put in place to assist their borrowers who are economically impacted by COVID-19 and also the need to continue to support overall credit and lending in the economy, including new residential mortgage lending. The three main retail banks assured the Tánaiste, Leo Varadkar T.D., Minister McGrath and me at meetings in July that they were considering applications and mortgage drawdowns from customers on the Temporary Wage Subsidy Scheme (TWSS) on a case by case basis and that they are taking a fair and balanced approach.

The purpose of the Employment Wage Subsidy Scheme (EWSS), which replaced the TWSS, is to support employers by helping them to continue trade as they deal with risk arising from COVID-19, and this puts employers in a position to retain key staff and ensure the viability of businesses and firms.

In respect of the approach of regulated mortgage lenders on new mortgage lending, the Central Bank has advised that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. If mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.

However, within the parameters of the regulatory framework, as set out below, the decision to grant or refuse an individual application for mortgage credit is a commercial decision to be made by the regulated entity. Also a loan offer may contain a condition that the lender can withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial decision for the lender.

The European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate.

In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation.

Where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.

If a mortgage applicant is not satisfied with how a regulated firm is dealing with them, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If they are still not satisfied with the response from the regulated firm, they can refer the complaint to the Financial Services and Pensions Ombudsman.