Update: Accommodating Needs of Borrowers, 24th June 2015

QUESTION NO:   118

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)

by Deputy Bernard J. Durkan

for ORAL ANSWER on 23/06/2015  

  To ask the Minister for Finance the extent to which he remains satisfied that the lending institutions are taking sufficient steps to accommodate the needs of borrowers, with particular reference to the requirements of small and medium sized enterprises, and homeowners, whose mortgage may be in arrears for a variety of reasons, but where the borrowers have consistently made payments to the maximum of their ability; if third party loan book purchasers have been adequately acquainted with the necessity to make particular efforts to accommodate such persons, in view of the fact that in the course of the purchase of their respective loan books, provision was made for such tolerances; and if he will make a statement on the matter.

REPLY.

  The Deputy will be aware that in their statements to the Joint Oireachtas Committee on Finance and Public Expenditure Reform, in April and May, the four main banks (AIB, BOI, Ulster Bank and PTSB)   outlined their strategies for dealing with customers in mortgage arrears.   All lenders indicated to the Committee their willingness to work with all borrowers who engage with them with a view to arriving at a negotiated solution that is acceptable to both parties.  

The recent Central Bank of Ireland Residential Mortgage Arrears and Repossessions statistics for quarter one of this year indicates that over 117,000 restructure arrangements have been put in place on primary dwelling homes (PDH) to the end of March and that over 85% of these are deemed to be meeting the terms of their arrangement.    This data indicates that lending institutions are complying with the Code of Conduct on Mortgage Arrears (CCMA) and they are accommodating the needs of borrowers who engage with them and that such engagement is key to arriving at a sustainable mutually acceptable restructure arrangement.    

The lending institutions, including those which have acquired loan books, are independent commercial entities. The Deputy will be aware, however, that the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 was passed by the Dáil on 17th June and I look forward to further discussion of the Bill at Second Stage, which will be taken in the Seanad tomorrow(24th June).      The purpose of this legislation is to protect consumers whose loans are sold by regulated financial service providers to unregulated firms. It will address concerns surrounding the continued applicability of the Central Bank’s codes and access for borrowers to the Financial Services Ombudsman after loan books are sold.    This legislation will ensure that borrowers retain their existing protections when their loan is sold.   A key element of this is the protection of distressed borrowers.   The CCMA, which the Deputy will be aware is a statutory Code issued under Section 117 of the Central Bank Act 1989, was revised in 2013 to strengthen consumer protections where necessary, and to ensure that the Code is facilitating the resolution of each case in a fair, sustainable and transparent manner.