133. Deputy Pearse Doherty asked the Minister for Finance his views and those of the Central Bank on whether the policy of a bank (details supplied) of charging an extra 1 percentage point interest rate on all restructured tracker mortgages is within the spirit and letter of the code of conduct on mortgage arrears; if this issue has been raised with him or the Central Bank; and if he will make a statement on the matter. (Question 48709/17 asked on 21 Nov 2017)
Minister for Finance (Deputy Paschal Donohoe): I can confirm for the Deputy that the matter referred to has not been raised with me.
I would remind the Deputy, however, that although the State has a 14% minority shareholding in BOI, I in my role as the Minister for Finance, have no direct function in the relationship between the bank and its customers. Decisions taken by the bank in this regard are matters for the board and management of the institution. The Minister for Finance must ensure that the bank is run on a commercial, cost effective and independent basis to protect the value of the bank as an asset to the State. A Relationship Framework has been specified that defines the nature of the relationship between the Minister for Finance and the bank. This Framework was published on 30 March 2012 and is available at: http://www.finance.gov.ie/sites/default/files/Bank-of-Ireland1.pdf.
Notwithstanding this, it is imperative that the bank is fully compliant with all regulatory requirements, including CCMA and measures put in place for consumer protection. I note, in this regard, the following reply which the Central Bank has provided in response to the Deputy’s question:
“The Central Bank’s Code of Conduct on Mortgage Arrears 2013 (CCMA) sets out how mortgage lenders must treat borrowers in or facing mortgage arrears. The CCMA applies to the mortgage loan of a borrower which is secured by his/her primary residence. The CCMA contains specific protections in respect of tracker mortgages. A lender cannot require a borrower to change from an existing tracker mortgage to another mortgage type, as part of any alternative repayment arrangement offered to the borrower, except in specific circumstances.
“If the lender has considered the available alternative repayment options and concluded that none of the options that would allow the borrower to retain his or her tracker interest rate are appropriate and sustainable for the borrower’s individual circumstances, the lender may offer the borrower an alternative repayment arrangement which requires the borrower to change from an existing tracker mortgage to another mortgage type.
“This can only be done if the alternative repayment arrangement:
a) is affordable for the borrower, and
b) is a long-term sustainable solution which is consistent with Central Bank of Ireland policy on sustainability.”