Statement from the Central Bank
Statement on examination of tracker mortgage-related issues
2 October 2015
The Central Bank has embarked on a broader examination of tracker mortgage-related issues covering, among other things, transparency of communications with and contractual rights of tracker mortgage borrowers.
The fair treatment of tracker mortgage borrowers has been a key supervisory and policy focus for the Central Bank over the past number of years. Our consumer protection framework requires all lenders to act in their consumers’ best interests and, in particular, requires lenders to disclose material information to consumers to enable them to make informed decisions. For those borrowers who are in mortgage arrears, the Code of Conduct on Mortgage Arrears restricts lenders from requiring a borrower to change to another mortgage rate type, other than in instances where no other option is appropriate or sustainable.
In line with our risk-based approach to supervision, our engagement with lenders has been intrusive in relation to lenders’ treatment of tracker mortgage borrowers. Since 2010, we have identified and pursued a number of lender-specific issues in relation to transparency for borrowers who opted to switch from their tracker rates or who had the right to revert to a tracker rate at the end of a fixed rate period. This has resulted in the use of supervisory powers, including the Administrative Sanctions Procedure, redress and compensation schemes for those borrowers who suffered detriment or loss as a result of their lenders’ practices.
Notwithstanding the considerable work undertaken to ensure consumers are appropriately protected, we remain concerned that there may be other tracker-related issues which could be impacting on consumers across the system. In this regard, we are currently engaging closely with a number of lenders on points of concern relating to their ability to demonstrate that they have acted in the best interests of their tracker mortgage customers, with a number of lenders currently undertaking their own internal reviews. We have also been engaging with consumer groups as well as the Financial Services Ombudsman to help inform our work. In addition, we have decided that a broader examination of tracker-related issues is warranted. We havebeen developing an appropriate methodology for such an examination in order to ensure that all issues will have been addressed by such a review We have written to all lenders notifying them of our intention to conduct such a review.