Dáil Éireann Debate, Thursday - 25 March 2021
45. Deputy Réada Cronin asked the Minister for Finance if he will address with mortgage providers their individual discretion on mortgage protection requirements pre-drawdown for persons with an underlying health condition (details supplied); and if he will make a statement on the matter. [16120/21]
Amharc ar fhreagraUnder section 126 of the Consumer Credit Act 1995 a mortgage lender is obliged to make sure that a mortgage applicant has mortgage protection insurance in place before granting a housing loan. However, the Act also provides for a number of limited exemptions to this statutory obligation where:
1. the house in respect of which the loan is made is, in the mortgage lender's opinion, not intended for use as the principal residence of the borrower or of his or her dependants;
2. loans to persons who belong to a class of persons which would not be acceptable to an insurer, or which would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally;
3. loans to persons who are over 50 years of age at the time the loan is approved;
4. loans to persons who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sum, in the event of death, of not less than the amount of the estimated outstanding principal amount.
The Central Bank indicates that it expects all lenders to adhere to their statutory obligations in relation to the offering of mortgage credit to prospective borrowers, including their obligations under section 126 of the Consumer Protection Act 1995.
However, it may also be the case that, in circumstances where there is no specific statutory obligation on a mortgage lender to arrange for mortgage protection insurance in association with a housing loan, an individual mortgage lender may as a matter of its own commercial policy require a mortgage borrower to put in place such an insurance policy as a condition for obtaining mortgage credit. That would be a commercial decision for an individual mortgage lender and it is not possible for me to instruct mortgage lenders on their lending policies and individual lending decisions. In the same way it is not possible for me interfere with the decisions insurance companies may make on applications for life insurance cover or direct such companies to provide cover to specific individuals. That is also a commercial matter and decision for individual insurers to make in line with their own risk policies and analysis. However, if a mortgage lender requires a consumer to hold a policy of insurance related to a housing loan, the lender is obliged to accept a policy selected by the consumer provided that such a policy has a level of guarantee equivalent to the amount that would be required to repay the outstanding credit or to insure the value of the security.
If a person is not satisfied with the way a regulated mortgage provider or insurance provider has dealt with them in relation to an application for a mortgage or for life insurance, or they believe that the regulated entity 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 entity. If they are still not satisfied with the response from the regulated entity, the response to their complaint from the regulated entity is required to include details for the borrower on how to refer their complaint to the statutory Financial Services and Pensions Ombudsman.
