UPDATE ON THE TRANSPOSITION OF THE MORTGAGE CREDIT DIRECTIVE
AND A CHANGE IN RESPECT OF ONE OF THE DISCRETION DECISIONS AS PREVIOUSLY ANNOUNCED IN JULY 2015
The objective of the Mortgage Credit Directive is to provide for a more harmonised mortgage credit market which contains a high level of consumer protection. The provisions of the Directive will have effect from 21 March 2016 and the Regulations which will transpose the Directive into Irish law are now at a very advanced stage of development.
The Directive contains a number of national discretions and the decisions on each of these were made public on 27 July 2015. However, it was indicated at that time that these decisions would remain the subject of consideration in the context of the finalisation of the transposition process. As this process now comes to a conclusion, the Department of Finance would like to announce a change to one of these decisions. It has now been decided that the discretion (No.26) option available in Article 28.3 of the Directive in relation to “additional” default charges - such as a default penalty charge - will not be exercised and, accordingly, this provision will not be incorporated into the transposing Regulations. All of the other decisions as announced last July, including that in relation to the Article 28.2 discretion to allow a creditor to impose default cost recovery charges (subject to the additional limitations which are in place under the provisions of the CCMA or section 149 of the Consumer Credit Act), remain unchanged.
[original Notice below]
The Mortgage Credit Directive
The Mortgage Credit Directive was adopted in February 2014 and it is required to be transposed by 21 March 2016. The objective of the Directive is to provide for a regulatory framework for the operation of the mortgage credit market which is harmonised in a number of areas and which Member States will be required to comply with in order to protect consumers. In particular, the Directive aims to develop a more transparent, efficient and competitive internal market by implementing strong protections for consumers when seeking mortgage credit, while promoting sustainable lending and borrowing.
The Directive, however, contains a number of discretions for Member States in the context of its transposition into domestic law and these discretions were the subject of a public consultation process in the latter part of last year. Nine responses were received from consumer and industry stakeholders. These submissions were taken into account in the decisions that have now been made on each of the national discretions. These decisions, together with the public consultation submissions received, are now set out below. The Department of Finance, in consultation with the Central Bank of Ireland other relevant public bodies, will now proceed with the drafting and other work required to transpose the Directive by 21 March 2016.
27 July 2015