I propose to take Questions Nos. 176 and 177 together.
It is the clear expectation of both the Government and the Central Bank that lenders engage effectively and sympathetically with distressed borrowers to deliver appropriate and sustainable solutions and treat borrowers at all times, including in response to COVID-19, in line with Central Bank’s robust consumer protection framework.
In relation to the refusal of certain services, it is unclear to which particular services the Deputy is referring. However, insofar as it applies to the provision of mortgage credit to consumers, it should be noted that there are a number of consumer protection regulatory requirements on regulated entities. 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. The assessment must take appropriate account of factors relevant to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR 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.
Within this regulatory framework the decision to grant or refuse an individual application for credit is then a commercial decision to be made by the regulated entity. In the same way, the regulated entity will solely determine its own credit policies in line with its own risk appetite. Nevertheless, in considering applications for credit from consumers, the Central Bank has indicated that it expects lenders to assess credit applications in a sympathetic but prudent manner, ensuring at all times that the credit applicant has the means and ability to repay the proposed credit in line with the terms of the proposed credit contract. In this regard, whether an applicant for credit has had a payment break in the past should not in itself be decisive or determinative. Lenders should look at an applicant’s overall financial position, and satisfy themselves that the applicant has the means and ability to repay the proposed credit in line with the terms of the proposed credit contract.
However, If a bank customer is not satisfied with how a regulated firm is dealing with them in relation to the provision of credit or any other financial service, 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 not satisfied with the response from the regulated firm, they can refer the complaint to the Financial Services and Pensions Ombudsman.
Overall I expect 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. I will also continue to work with the Central Bank, and indeed also maintain contact with the main lenders, to ensure that appropriate arrangements and supports will be available for borrowers and other financial customers who continue to be impacted by COVID-19.
