S.I. No. 142/2016 - European Union (Consumer Mortgage Credit Agreements) Regulations 2016

ARRANGEMENT OF SECTIONS

Part 1 Preliminary

1.

2.

3.

4.

5.

6.

Part 2 Financial education

7.

Part 3 Conditions applicable to creditors and mortgage credit intermediaries

8.

9.

10.

Part 4 Information and practices preliminary to the conclusion of the credit agreement

11.

12.

13.

14.

15.

16.

17.

Part 5 Annual percentage rate of charge

18.

Part 6 Creditworthiness assessment

19.

20.

21.

Part 7 Database access

22.

Part 8 Advisory services

23.

Part 9 Foreign currency loans and variable rate loans

24.

25.

Part 10 Sound execution of credit agreements and related rights

26.

27.

28.

29.

Part 11 Requirements for establishment and supervision of mortgage credit intermediaries

30.

31.

32.

33.

34.

35.

Part 12 Admission and supervision of non-credit institutions

36.

Part 13 Cooperation between competent authorities of different member states

37.

38.

Part 14 Miscellaneous

39.

40.

41.

42.

Part 15 Amendments of other enactments

43.

44.

45.

Schedule 1 Minimum knowledge and competence requirements

Schedule 2 European Standardised Information Sheet (ESIS)

Schedule 3 Calculation of the Annual Percentage Rate of Charge (APRC)

S.I. No. 142 of 2016

EUROPEAN UNION (CONSUMER MORTGAGE CREDIT AGREEMENTS) REGULATIONS 2016

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 25th March, 2016.

I, MICHAEL NOONAN, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010, hereby make the following regulations:

PART 1 PRELIMINARY

Citation

Commencement

Interpretation

“advisory services” means the provision of personal recommendations to a consumer in respect of one or more transactions relating to credit agreements and constitutes a separate activity from the granting of a credit and from credit intermediation activities;

“ancillary service” means a service offered to the consumer in conjunction with the credit agreement;

“annual percentage rate of charge” or “APRC” means the total cost of the credit to the consumer, expressed as an annual percentage of the total amount of credit, where applicable, including the costs referred to in Regulation 18(2), and equates, on an annual basis, to the present value of all future or existing commitments (drawdowns, repayments and charges) agreed by the creditor and the consumer;

“authorisation” means a mortgage credit intermediary’s authorisation granted under Regulation 30;

“borrowing rate”, in relation to a credit agreement, means the interest rate expressed as a fixed or variable percentage applied on an annual basis to the amount of credit drawn down;

“bridging loan” means a credit agreement either of no fixed duration or which is due to be repaid within 12 months, used by the consumer as a temporary financing solution during the course of taking steps to enter into another financial arrangement for the immovable property;

“bundling practice” means the offering or the selling of a credit agreement in a package with other distinct financial products or services in circumstances where the credit agreement is also made available to the consumer separately, but not necessarily on the same terms or conditions as when offered bundled with the ancillary services;

“Central Bank” means the Central Bank of Ireland;

“consumer” means a natural person who is acting, in the course of a transaction to which these Regulations apply, for purposes outside his or her trade, business or profession;

“contingent liability or guarantee” means a credit agreement which acts as a guarantee to another separate but ancillary transaction, and in circumstances where the capital secured against an immovable property is only drawn down if an event or events specified in the contract occur;

“contravene” includes fail to comply;

“credit agreement” means an agreement under which a creditor grants or promises to grant to a consumer credit falling within Regulation 5 in the form of a deferred payment, loan or other similar financial accommodation;

“credit institution” means an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account;

“creditor” means a natural or legal person who grants or promises to grant credit falling within Regulation 5 in the course of his or her trade, business or profession;

“creditworthiness assessment” means the evaluation of the prospect for the debt obligation resulting from the credit agreement to be met;

“Directive” means Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010;

“durable medium” means any medium that enables a consumer to store information addressed personally to the consumer in a way that renders it accessible for future reference for a period of time adequate for the purposes of the information and allows the unchanged reproduction of the information;

“EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

“EEA Member State” means a state which is a contracting party to the EEA Agreement;

“enactment” includes an instrument made under an enactment;

“foreign currency loan” means a credit agreement where the credit is:

• (a) denominated in a currency other than that in which the consumer receives the income or holds the assets from which the credit is to be repaid, or

• (b) denominated in a currency other than that of the EEA Member State in which the consumer is resident;

“group” means a parent undertaking and all its subsidiary undertakings;

“home EEA Member State” means:

• (a) where the creditor or credit intermediary is a natural person, the EEA Member State in which his or her head office is situated;

• (b) where the creditor or credit intermediary is a legal person, the EEA Member State in which its registered office is situated or, if under its national law it has no registered office, the EEA Member State in which its head office is situated;

“host EEA Member State” means the EEA Member State, other than the home EEA Member State, in which the creditor or credit intermediary has a branch or provides services;

“mortgage credit intermediary” has the meaning given to it by Regulation 4;

“non-credit institution” means any creditor who is not a credit institution;

“shared equity credit agreement” means a credit agreement where the capital repayable is based on a contractually set percentage of the value of the immovable property at the time of the capital repayment or repayments;

“staff” means:

• (a) any natural person working for the creditor, or mortgage credit intermediary who is directly engaged in the activities to which these Regulations relate or who has contacts with consumers in the course of activities to which these Regulations relate,

• (b) any natural person directly managing or supervising the natural persons referred to in paragraph (a);

“tied credit intermediary” means any mortgage credit intermediary who acts on behalf of and under the full and unconditional responsibility of:

• (a) only one creditor, or

• (b) only one group;

“total amount of credit”, in relation to a credit agreement, means the limit of the credit, or the total sum, made available under the credit agreement;

“total amount payable by the consumer”, in relation to a credit agreement, means the sum of the total amount of the credit and the total cost of the credit to the consumer;

“total cost of the credit to the consumer”, in relation to a credit agreement, means all the costs that the consumer is required to pay in connection with the credit agreement and that are known to the creditor concerned, including—

• (a) interest, commissions, taxes and any other kind of fees, including the cost of valuation of the property where such valuation is necessary to obtain credit, but excluding registration fees for the transfer of ownership of the immovable property and any charges payable by the consumer for non-compliance with the commitments laid down in the credit agreement,

• (b) where the conclusion of a service contract is compulsory to obtain the credit or to obtain it on the terms and conditions marketed, costs in respect of ancillary services relating to the credit agreement (in particular, insurance premiums);

“tying practice” means the offering or the selling of a credit agreement in a package with other distinct financial products or services in circumstances where the credit agreement is not made available to the consumer separately.

• (2) A word or expression that is used in these Regulations and is also used in the Directive has the meaning in these Regulations that it has in the Directive.

“Mortgage credit intermediary” — definition

• (a) is not acting as a creditor, and

• (b) is not merely introducing, either directly or indirectly, a consumer to a creditor or credit intermediary,

and who—

• (i) in the course of his or her trade, business or profession, for remuneration, which may take a pecuniary form or any other agreed form of financial consideration, carries on any of the activities referred to in paragraph (2), and

• (ii) either is the holder of an authorisation granted under Regulation 30 or stands admitted, pursuant to Article 29 of the Directive, in another EEA Member State.

• (2) The following are the activities referred to in paragraph (1)(i)—

• (a) presents or offers credit agreements to consumers;

• (b) assists consumers by undertaking preparatory work or other pre-contractual administration in respect of credit agreements other than as referred to in subparagraph (a);

• (c) concludes credit agreements with consumers on behalf of the creditor.

Application of these Regulations

• (a) a credit agreement which is secured by a charge, a mortgage or by another comparable security used in an EEA Member State on residential immovable property or secured by a right related to residential immovable property, and where the person to whom the credit is provided is a consumer;

• (b) a credit agreement the purpose of which is to acquire or retain property rights in land or in an existing or projected building, and where the person to whom the credit is provided is a consumer.

• (2) These Regulations shall not apply to the following:

• (a) an equity release credit agreement where the creditor:

• (i) contributes a lump sum, periodic payments or other forms of credit disbursement in return for a sum deriving from the future sale of a residential immovable property or a right relating to residential immovable property; and

• (ii) will not seek repayment of the credit until the occurrence of one or more than one life event that is specified in the credit agreement, being a life event falling within a category specified in paragraph (3), unless the consumer breaches his or her contractual obligations in circumstances which allow the creditor to terminate the credit agreement;

• (b) a credit agreement where the credit is granted by an employer to an employee or employees as a secondary activity in circumstances where such credit is offered free of interest or at an annual percentage rate of charge lower than that prevailing in the market and not offered to the public generally;

• (c) a credit agreement where the credit is granted free of interest and without any other charges except those that recover costs directly related to the securing of the credit;

• (d) a credit agreement in the form of an overdraft facility and where the credit has to be repaid within one month;

• (e) a credit agreement that is the outcome of a settlement reached in court proceedings or in proceedings before another statutory authority;

• (f) a credit agreement, not secured on residential immovable property, which relates to the deferred payment free of charge of an existing debt;

• (g) a housing loan made by a local authority, or any other loan not secured by a mortgage made by a local authority for the purposes of carrying out improvement works to a house.

• (3) Each of the following is a category of life event referred to in paragraph (2)(a)(ii)—

• (a) the death of the consumer (or a surviving dependant of the consumer, or a nominated person residing in the property);

• (b) permanent vacation of the property (for example, the consumer ceasing to reside in the property and with no reasonable prospect of return);

• (c) sale of the property;

• (d) the consumer acquires another property as an alternative principal residence.

Competent authority

PART 2 FINANCIAL EDUCATION

Financial education of consumers

• (2) In addition to the preceding matters, the foregoing Commission shall, in conjunction with any other body it considers appropriate, ensure that clear and general information on the credit granting process is made available in order to guide consumers, especially those who take out a mortgage credit for the first time.

PART 3 CONDITIONS APPLICABLE TO CREDITORS AND MORTGAGE CREDIT INTERMEDIARIES

Conduct of business obligations when providing credit to consumers

• (a) devising or otherwise creating credit products,

• (b) granting or acting as an intermediary or providing advisory services on credit (and where appropriate ancillary services) to consumers, or

• (c) executing a credit agreement.

• (2) In relation to carrying on of any activity referred to paragraph (1)(b), the activity shall be based on:

• (a) information about the consumer’s circumstances,

• (b) any specific requirement made known by the consumer,

• (c) reasonable assumptions about risks to the consumer’s situation over the term of the credit agreement, and

• (d) where the activity is the provision of advisory services, the activity shall in addition be based on the information required under Regulation 23(4)(a).

• (3) Creditors shall remunerate their staff and mortgage credit intermediaries, and mortgage credit intermediaries shall remunerate their staff, in a manner that does not impede compliance with the obligation set out in paragraphs (1) and (2).

• (4) When establishing and applying remuneration policies for their staff responsible for the assessment of creditworthiness, a creditor shall comply with the following principles in a way and to the extent that is appropriate to the creditor’s size, internal organisation and the nature, scope and complexity of the creditor’s activities:

• (a) the remuneration policy is consistent with and promotes sound and effective risk management and does not encourage risk-taking that exceeds the level of tolerated risk of the creditor;

• (b) the remuneration policy is in line with the business strategy, objectives, values and long-term interests of the creditor, and incorporates measures to avoid conflicts of interest, in particular by providing that remuneration is not contingent on the number or proportion of credit applications accepted.

• (5) Where a creditor or mortgage credit intermediary provides advisory services, the remuneration structure of the staff involved shall not prejudice their ability to act in the consumer’s best interest and in particular shall not be contingent on sales targets.

• (6) Where a creditor or mortgage credit intermediary intends to require the making of a payment in respect of advisory services or credit intermediate services, and it is proposed that this payment be incorporated into the amount advanced to the consumer, the creditor or mortgage credit intermediary shall, prior to concluding the credit agreement:

• (a) inform the consumer, on paper or on another durable medium, that the consumer has the right to make such a payment separately and not include it in the credit agreement; and

• (b) provide the following information to the consumer on paper or on another durable medium:

• (i) the amount of the payment; and

• (ii) the overall cost of making the payment over the term of the loan.

• (7) A creditor or mortgage credit intermediary who contravenes a provision of this Regulation commits an offence.

Obligation to provide information free of charge to consumers

Knowledge and competence requirements for staff

• (a) devising or otherwise creating credit products, or the offering or granting of credit agreements,

• (b) the carrying out of credit intermediation activities as set out in the definition of “mortgage credit intermediary” in Regulation 4, or

• (c) the provision of advisory services.

• (2) Where the conclusion of a credit agreement includes an ancillary service, creditors and mortgage credit intermediaries shall require their staff to possess appropriate knowledge and competence in relation to that ancillary service.

• (3) The Central Bank shall establish, and publish in a form considered appropriate by it, minimum knowledge and competence requirements for the staff of creditors and mortgage credit intermediaries and those requirements shall at least be in accordance with the principles and other provisions set out in Schedule 1.

• (4) Where a creditor or mortgage credit intermediary provides its services in the State through a branch, the Central Bank shall be responsible for establishing the minimum knowledge and competence requirements applicable to the staff of such a branch.

• (5) Where a creditor or mortgage credit intermediary provides its services in the State under the freedom to provide services, the Central Bank shall establish minimum knowledge and competence requirements for those requirements referred to in paragraph 1(b), (c), (e) and (f) of Schedule 1.

• (6) In relation to the effective supervision of creditors and mortgage credit intermediaries who are providing their services within the territory of one or more other EEA Member States under the freedom to provide services, the Central Bank shall cooperate with the competent authorities of other EEA Member States for the effective supervision and enforcement of the minimum knowledge and competence requirements of the host EEA Member State. For that purpose, the Central Bank may delegate tasks and responsibilities to the competent authorities of other EEA Member States and shall perform or fulfil tasks and responsibilities delegated to it, under Article 9(5) of the Directive, by such competent authorities

PART 4 INFORMATION AND PRACTICES PRELIMINARY TO THE CONCLUSION OF THE CREDIT AGREEMENT

General provisions applicable to advertising and marketing and provision concerning Consumer Credit Act 1995’s application

• (2) In particular, wording shall not be used in advertising or marketing communications that may create false expectations for a consumer regarding the availability or the cost of a credit.

• (3) To the extent that a provision of Part II of the Consumer Credit Act 1995 (No.24 of 1995) is inconsistent with a provision of this Part, that provision of that Part II shall not apply as respects credit agreements to which these Regulations apply.

Standard information to be included in advertising

• (a) the identity of the creditor or, where applicable, the mortgage credit intermediary;

• (b) where applicable, that the credit agreement will be secured by a mortgage or another comparable security commonly used in an EEA Member State on residential immovable property or by a right related to residential immovable property;

• (c) the borrowing rate, indicating whether this is fixed or variable or a combination of both, together with particulars of any charges included in the total cost of the credit to the consumer;

• (d) the total amount of credit;

• (e) the annual percentage rate of charge which shall be included in the advertisement at least as prominently as any interest rate;

• (f) where applicable, the duration of the credit agreement;

• (g) where applicable, the amount of the instalments;

• (h) where applicable, the total amount payable by the consumer;

• (i) where applicable, the number of instalments;

• (j) where applicable, a warning regarding the fact that possible fluctuations of the exchange rate could affect the amount payable by the consumer.

• (2) The information referred to in paragraph (1), other than that referred to in subparagraph (a), (b) or (j) thereof, shall be specified by means of a representative example and shall adhere to that representative example throughout. The Central Bank shall set out, and publish in a form considered appropriate by it, the criteria to be adhered to by a creditor or mortgage credit intermediary, as the case may be, in determining, for that purpose, a representative example and those criteria shall be adhered to by the creditor or mortgage credit intermediary for that purpose accordingly.

• (3) Where the conclusion of a contract regarding an ancillary service, in particular insurance, is mandatory in order to obtain the credit or to obtain it on the terms and conditions marketed, and the cost of that service cannot be determined in advance, the obligation to enter into that contract shall be stated in a clear, concise and prominent way, together with the annual percentage rate of charge.

• (4) The information referred to in paragraphs (1) and (3) shall be easily legible or clearly audible as appropriate, depending on the medium used for advertising.

• (5) This Regulation is without prejudice to any enactment concerning financial services that imposes, or enables the Bank to impose, requirements in relation to credit agreements and, in particular, sections 8H, 128 , 133 and 135 of the Consumer Credit Act 1995 , section 117 of the Central Bank Act 1989 (No.16 of 1989), Parts 7 and 8 of the Central Bank (Supervision and Enforcement) Act 2013 (No.26 of 2013) and the provisions of the Consumer Protection Act 2007 .

• (6) However paragraph (5) shall not be construed as meaning that anything inconsistent with a provision of this Regulation contained in a direction for the time being in force under section 135 of the Consumer Credit Act 1995 overrides that provision.

• (7) A creditor or mortgage credit intermediary who contravenes a provision of this Regulation commits an offence.

Tying and bundling practices

• (2) A creditor may request a consumer to open or maintain a payment or a savings account where the only purpose of such an account is to accumulate capital to repay the credit, to service the credit, to pool resources to obtain the credit or to provide additional security for the creditor in the event of default.

• (3) A creditor may offer or sell to the consumer a credit agreement to which these Regulations apply in the manner described in paragraph (1) provided the creditor can demonstrate to the Central Bank that the tied products or categories of products offered, on terms and conditions similar to each other, which are not made available separately, result in a clear benefit to the consumer taking due account of the availability and the prices of the relevant products offered on the market.

• (4) The Central Bank may, in order to protect the interests of consumers, specify that there shall be complied with such conditions, including time limits, as it considers appropriate in relation to the making available by a creditor of the products or categories of products (or the creditor’s offering to make available such products or categories) referred to in paragraph (3) and a creditor shall comply with such conditions accordingly.

• (5) Paragraphs (3) and (4) shall only apply to products which are marketed after 20 March 2014.

• (6) The Central Bank shall publish, in a form considered appropriate by it, conditions that are the subject of a specification made by it under paragraph (4).

• (7) If a creditor requires a consumer to hold a policy of insurance related to the credit agreement, the creditor shall accept a policy selected by the consumer (and which can be from an insurance provider different to the preferred supplier of the creditor) provided that such a policy has a level of guarantee equivalent to the one the creditor has proposed and in any event shall be no greater than an amount that would be required to guarantee repayment of the outstanding credit or to insure the value of the security. This is without prejudice to the requirements of sections 124, 126 and 127 of the Consumer Credit Act 1995 .

• (8) A creditor who contravenes a provision of this Regulation commits an offence.

General information

• (a) the identity and the geographical address of the issuer of the information;

• (b) the purposes for which the credit may be used;

• (c) the forms of security, including, where applicable, the possibility for it to be located in another EEA Member State;

• (d) the possible duration of the credit agreements;

• (e) types of available borrowing rate, indicating whether fixed or variable or both, with a short description of the characteristics of a fixed and variable rate, including related implications for the consumer;

• (f) where foreign currency loans are available, an indication of the foreign currency or currencies, including an explanation of the implications for the consumer where the credit is denominated in a foreign currency;

• (g) a representative example of the total amount of credit, the total cost of the credit to the consumer, the total amount payable by the consumer and the annual percentage rate of charge;

• (h) an indication of possible further costs, not included in the total cost of the credit to the consumer, to be paid in connection with a credit agreement;

• (i) the range of different options available for reimbursing the credit to the creditor, including the number, frequency and amount of the regular repayment instalments;

• (j) where applicable, a clear and concise statement that compliance with the terms and conditions of the credit agreement does not guarantee repayment of the total amount of credit under the credit agreement;

• (k) a description of the conditions directly relating to early repayment;

• (l) whether a valuation of the property is necessary and, where applicable, who is responsible for ensuring that the valuation is carried out, and whether any related costs arise for the consumer;

• (m) an indication of ancillary services the consumer is obliged to acquire in order to obtain the credit or to obtain it on the terms and conditions marketed and, where applicable, a clarification that the ancillary services may be purchased from a provider that is not the creditor; and

• (n) a general warning concerning possible consequences of non-compliance with the commitments linked to the credit agreement.

• (2) This Regulation is without prejudice to any enactment concerning financial services that imposes, or enables the Central Bank to impose, requirements in relation to credit agreements and, in particular, sections 8H, 128 and 133 of the Consumer Credit Act 1995 , section 117 of the Central Bank Act 1989 and Parts 7 and 8 of the Central Bank (Supervision and Enforcement) Act 2013 .

Pre-contractual information

• (a) without undue delay after the consumer has given the necessary information on his or her needs, financial situation and preferences in accordance with Regulation 21, and

• (b) in good time before the consumer is bound by any credit agreement or offer,

provide the consumer with the personalised information needed to enable the consumer to compare the credits available on the market, to assess their implications and to make an informed decision on whether to conclude a credit agreement.

• (2) The personalised information referred to in paragraph (1) shall be provided, on paper or on another durable medium, by means of the European Standardised Information Sheet (ESIS) specified in Schedule 2.

• (3) When an offer binding on the creditor is provided to the consumer, it shall be provided on paper or on another durable medium and shall be accompanied by an ESIS and by a copy of the draft credit agreement.

• (4) For a period of 30 days after the making of the offer of credit (the “reflection period”), the consumer shall be permitted to decide whether to accept the offer. During the reflection period, the offer of credit shall be binding on the creditor and the consumer may accept the offer at any time during the reflection period.

• (5) Where the borrowing rate or other costs applicable to the offer of credit are determined on the basis of the selling of underlying bonds or other long-term funding instruments, the borrowing rate or other costs may vary from that stated in the offer in accordance with the value of the underlying bond or other long-term funding instrument.

• (6) The creditor and, where applicable, the mortgage credit intermediary who has supplied the ESIS to the consumer shall be deemed to have fulfilled the requirements regarding information provision to the consumer prior to the conclusion of a distance contract contained in Directive 2002/65/EC and shall be deemed to satisfy the requirements of Article 5(1) of that Directive only where the creditor or mortgage credit intermediary, as the case may be, has at least supplied the ESIS prior to the conclusion of the contract.

• (7) The creditor, or where applicable the mortgage credit intermediary, shall not modify the ESIS as set out in Schedule 2 other than as provided for in that Schedule.

• (8) Any additional information which the creditor or, where applicable, the mortgage credit intermediary, may provide to the consumer or is required to provide to the consumer shall be given in a separate document which may be annexed to the ESIS.

• (9) In the case of voice telephony communications, as referred to in Article 3(3) of Directive 2002/65/EC, the description of the main characteristics of the financial service to be provided pursuant to the second indent of point (b) of Article 3(3) of that Directive shall include at least the items referred to in sections 3 to 6 of Part A of the ESIS set out in Schedule 2.

• (10) A creditor or mortgage credit intermediary who contravenes a provision of this Regulation commits an offence.

Information requirements concerning mortgage credit intermediaries

• (a) the identity and the geographical address of the mortgage credit intermediary;

• (b) the register in which he or she has been included, the registration number, where applicable, and the means for verifying such registration;

• (c) whether the mortgage credit intermediary is tied to or works exclusively for one creditor and paragraph (2) supplements this subparagraph;

• (d) whether the mortgage credit intermediary offers advisory services;

• (e) the fee, where applicable, payable by the consumer to the mortgage credit intermediary for its services or, where this is not possible, the method for calculating the fee;

• (f) the procedures allowing consumers or other interested parties to register complaints internally about mortgage credit intermediaries and, where appropriate, the means by which recourse to out-of-court complaint and redress procedures can be sought;

• (g) where applicable, the existence and where known the amount of commissions or other inducements, payable by the creditor or third parties to the mortgage credit intermediary for their services in relation to the credit agreement and paragraph (3) supplements this subparagraph.

• (2) For the purposes of paragraph (1)(c), where the mortgage credit intermediary is tied to or works exclusively for one creditor, it shall provide the name of the creditor for which it is acting. The mortgage credit intermediary may disclose that it is independent where it meets the conditions specified in Regulation 23(5).

• (3) For the purposes of paragraph (1)(g), where the amount referred to in that provision is not known at the time of disclosure, the mortgage credit intermediary shall inform the consumer that the actual amount will be disclosed at a later stage in the ESIS.

• (4) A mortgage credit intermediary who is not tied but who receives commission from one or more creditors shall, at the consumer’s request, provide information on the variation in levels of commission payable by the different creditors providing the credit agreements being offered to the consumer. The consumer shall be informed that he or she has the right to request such information.

• (5) Where the mortgage credit intermediary charges a fee to the consumer and additionally receives commission from the creditor or a third party, the mortgage credit intermediary shall explain to the consumer whether or not the commission will be offset against the fee, either in part or in full.

• (6) A mortgage credit intermediary shall inform the creditor whether or not a fee is payable by the consumer to the mortgage credit intermediary for its services and, if so, the amount of the fee that is payable, and the creditor shall take this into account for the purpose of calculating the annual percentage rate of charge.

• (7) A mortgage credit intermediary who contravenes a provision of this Regulation commits an offence.

Adequate explanations

• (2) The explanations shall, where applicable, include:

• (a) the pre-contractual information to be provided in accordance with:

• (i) in the case of creditors, the information specified in Regulation 15;

• (ii) in the case of mortgage credit intermediaries, the information specified in Regulations 15 and 16;

and

• (b) in all cases—

• (i) the essential characteristics of the products proposed;

• (ii) the specific effects the products proposed may have on the consumer, including the consequences of default in payment by the consumer; and

• (iii) where ancillary services are bundled with a credit agreement, whether each component of the bundle can be terminated separately and the implications for the consumer of doing so.

• (3) The Central Bank may, if it considers it appropriate, give one or more directions in writing adapting the manner by which and the extent to which the adequate explanations referred to in paragraphs (1) and (2) is given, as well as by whom the explanations are given, to the circumstances of the situation in which the credit agreement is offered, the person to whom it is offered and the nature of the credit offered and, for so long as directions given under this paragraph are in force, paragraphs (1) and (2) shall be construed and have effect in accordance with those directions.

PART 5 ANNUAL PERCENTAGE RATE OF CHARGE

Calculation of the annual percentage rate of charge (APRC)

• (2) The costs of opening and maintaining a specific account, of using a means of payment for both transactions and drawdowns on that account and of other costs relating to payment transactions shall be included in the total cost of credit to the consumer whenever the opening or maintaining of an account is obligatory in order to obtain the credit or to obtain it on the terms and conditions marketed.

• (3) The calculation of the APRC shall be based on the assumption that the credit agreement is to remain valid for the period agreed and that the creditor and the consumer will fulfil their obligations under the terms and by the dates specified in the credit agreement.

• (4) In the case of credit agreements containing clauses allowing variations in the borrowing rate and, where applicable, in the charges contained in the APRC but unquantifiable at the time of calculation, the APRC shall be calculated on the assumption that the borrowing rate and other charges will remain fixed in relation to the level set at the conclusion of the contract.

• (5) For credit agreements for which a fixed borrowing rate is agreed in relation to the initial period of at least five years, at the end of which a negotiation on the borrowing rate takes place to agree on a new fixed rate for a further material period, the calculation of the additional, illustrative APRC disclosed in the ESIS shall cover only the initial fixed rate period and shall be based on the assumption that, at the end of the fixed borrowing rate period, the capital outstanding is repaid.

• (6) Where the credit agreement allows for variations in the borrowing rate, the consumer shall be informed of the possible impacts of variations on the amounts payable and on the APRC at least by means of the ESIS. This shall be done by providing the consumer with an additional APRC which illustrates the possible risks linked to a significant increase in the borrowing rate. Where the borrowing rate is not capped, this information shall be accompanied by a warning highlighting that the total cost of the credit to the consumer, shown by the APRC, may change.

• (7) Paragraph (6) shall not apply to credit agreements where the borrowing rate is fixed for an initial period of at least five years, at the end of which a negotiation on the borrowing rate takes place in order to agree on a new fixed rate for a further material period, for which an additional, illustrative APRC is provided for in the ESIS.

• (8) Where applicable, the additional assumptions set out in Schedule 3 shall be used in calculating the APRC.

• (9) For the avoidance of doubt, the requirements of paragraphs (1) to (5) and (8) shall operate to the exclusion of any requirement imposed by or under any other enactment that would otherwise govern the calculation of the APRC.

• (10) A creditor or mortgage credit intermediary who contravenes a provision of this Regulation commits an offence.

PART 6 CREDITWORTHINESS ASSESSMENT

Obligation to assess the creditworthiness of consumer

• (2) A creditor shall ensure that the procedures and information on which the assessment is based are established, documented and maintained.

• (3) The assessment of creditworthiness shall not rely predominantly on the value of the residential immovable property exceeding the amount of the credit or the assumption that the residential immovable property will increase in value unless the purpose of the credit agreement is to construct or renovate the residential immovable property.

• (4) Where a creditor concludes a credit agreement with a consumer, the creditor shall not subsequently cancel or alter the credit agreement to the detriment of the consumer on the grounds that the assessment of creditworthiness was incorrectly conducted. This paragraph shall not apply where it is demonstrated that the consumer knowingly withheld or falsified the information within the meaning of Regulation 21.

• (5) A creditor shall only make credit available to the consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement.

• (6) Where a creditor consults a database as part of the creditworthiness assessment, the creditor shall inform the consumer in advance that a database is to be consulted.

• (7) Where the credit application is refused, the creditor shall inform the consumer without delay of the refusal and, where applicable, that the decision is based on automated processing of data. Where the refusal is based on the result of the database consultation, the creditor shall inform the consumer of the result of such consultation and of the particulars of the database consulted.

• (8) Before any significant increase in the total amount of credit is granted after the conclusion of the credit agreement, a creditor shall ensure that the consumer’s creditworthiness is re-assessed on the basis of updated information unless such additional credit was envisaged and included in the original creditworthiness assessment.

• (9) This Regulation is without prejudice to the provisions of the Data Protection Act 1988 (No.25 of 1988).

• (10) A creditor who contravenes a provision of this Regulation commits an offence.

Property valuation

• (2) A creditor shall ensure that internal and external appraisers conducting property valuations are professionally competent and sufficiently independent from the credit underwriting process so that they can provide an impartial and objective valuation, which shall be documented in a durable medium and of which a record shall be kept by the creditor.

Disclosure and verification of consumer information

• (2) A mortgage credit intermediary shall accurately submit the necessary information obtained from the consumer to the relevant creditor to enable the creditworthiness assessment to be carried out.

• (3) A creditor shall specify, in a clear and straightforward way at the pre-contractual phase, the necessary information and independently verifiable evidence that the consumer needs to provide and the timeframe within which the consumer needs to provide the information. Such a request for information shall be proportionate and limited to what is necessary to conduct a proper creditworthiness assessment.

• (4) A creditor may seek clarification of the information received in response to that request where necessary to enable the assessment of creditworthiness.

• (5) A creditor may not terminate the credit agreement on the grounds that the information provided by the consumer before the conclusion of the credit agreement was incomplete, unless it can be demonstrated that the consumer knowingly withheld or falsified information.

• (6) The creditor, or mortgage credit intermediary as appropriate, shall inform the consumer of the need to provide correct information in response to the request referred to in paragraph (3) and that such information needs to be as complete as necessary in order to conduct a proper creditworthiness assessment. The creditor, or mortgage credit intermediary as appropriate, shall warn the consumer that, where the creditor is unable to carry out an assessment of creditworthiness because the consumer chooses not to provide the information or verification necessary for an assessment of creditworthiness, the credit cannot be granted. That warning may be provided in a standardised format.

• (7) This Regulation is without prejudice to—

• (a) any enactment concerning financial services that imposes, or enables the Central Bank to impose, requirements in relation to credit agreements and, in particular, sections 8H, 128 and 133 of the Consumer Credit Act 1995 , section 117 of the Central Bank Act 1989 and Parts 7 and 8 of the Central Bank (Supervision and Enforcement) Act 2013 , and

• (b) the Data Protection Act 1988 and, in particular sections 2 to 2D, thereof.

• (8) A creditor or mortgage credit intermediary who contravenes a provision of this Regulation commits an offence.

PART 7 DATABASE ACCESS

Database access

• (2) Paragraph (1) applies both to—

• (a) databases which are operated by private credit bureaux or credit reference agencies; and

• (b) public registers.

• (3) This Regulation is without prejudice to the application of the Data Protection Act 1988 .

PART 8 ADVISORY SERVICES

Standards for advisory services

• (2) Before the provision of advisory services or, where applicable, the conclusion of a contract for the provision of advisory services, the creditor or mortgage credit intermediary shall provide the consumer with the following information on paper or another durable medium:

• (a) whether the recommendation will be based on considering only their own product range in accordance with paragraph (4)(b) or a wide range of products from across the market in accordance with paragraph (4)(c) so that the consumer can understand the basis on which the recommendation is made;

• (b) where applicable, the fee payable by the consumer for the advisory services or, where the amount cannot be ascertained at the time of disclosure, the method used for its calculation.

• (3) The information referred to in paragraph (2)(a) and (b) may be provided to the consumer in the form of additional pre-contractual information.

• (4) In addition to the requirements of Regulations 8 and 10, where advisory services are provided to consumers—

• (a) a creditor or mortgage credit intermediary shall obtain the necessary information regarding the consumer’s personal and financial situation, his or her preferences and objectives so as to enable the recommendation of suitable credit agreements and such an assessment shall be based on information that is up to date at that moment in time and shall take into account reasonable assumptions as to risks to the consumer’s situation over the term of the proposed credit agreement;

• (b) a creditor or tied credit intermediary shall consider a sufficiently large number of credit agreements in his or her product range and recommend a suitable credit agreement or several suitable credit agreements from among his or her product range for the consumer’s needs, financial situation and personal circumstances;

• (c) a non-tied credit intermediary shall consider a sufficiently large number of credit agreements available on the market and recommend a suitable credit agreement or several suitable credit agreements available on the market for the consumer’s needs, financial situation and personal circumstances;

• (d) a creditor and a mortgage credit intermediary shall each act in the best interests of the consumer by:

• (i) informing themselves about the consumer’s needs and circumstances; and

• (ii) recommending suitable credit agreements in accordance with subparagraphs (a), (b) and (c); and

• (e) a creditor or mortgage credit intermediary shall give the consumer a record on paper or on another durable medium of the recommendation provided.

• (5) A creditor or mortgage credit intermediary shall not use the term “independent advice” or “independent advisor” in the course of providing advisory services unless:

• (a) the creditor or mortgage credit intermediary considers a sufficiently large number of credit agreements available on the market; and

• (b) if the number of creditors considered is less than a majority of the market, the creditor or mortgage credit intermediary is not remunerated for those advisory services by one or more creditors.

• (6) The Central Bank may, if it considers it appropriate, require creditors or mortgage credit intermediaries to warn a consumer when, considering the consumer’s financial situation, a credit agreement may induce a specific risk for the consumer.

• (7) Advisory services shall only be provided by-

• (a) a creditor;

• (b) a mortgage credit intermediary;

• (c) a barrister, solicitor or accountant providing advisory services if—

• (i) he or she is subject to regulation by a professional body, and

• (ii) those services are provided in an incidental manner in the course of a professional activity;

• (d) any of the following (but only in the context of managing existing debt)—

• (i) an approved intermediary authorised under section 47 of the Personal Insolvency Act 2012 (No.44 of 2012) acting as such or a personal insolvency practitioner authorised under Chapter 1 of Part 5 of that Act carrying on practice as such;

• (ii) a debt management firm authorised by the Central Bank;

• (iii) a charitable organisation within the meaning of section 2 (1) of the Charities Act 2009 (No.6 of 2009);

• (iv) the Money Advice and Budgeting Service;

• (v) a person who is a party to the “Protocol for Independent Advice to Borrowers Availing of Long Term Mortgage Forbearance” made on 2 August 2012 (as amended from time to time) and provides advice in accordance with that Protocol.

• (8) A person referred to in subparagraph (c), or clause (i), (ii), (iii), (iv) or (v) of subparagraph (d), of paragraph (7) shall not benefit from the right referred to in Regulation 33(1) to provide services for the entire European Economic Area.

• (9) This Regulation is without prejudice to Regulation 17 and the need to ensure that services are made available to consumers to help them understand their financial needs and which types of products are likely to meet those needs.

• (10) A creditor or mortgage credit intermediary or other person who contravenes a provision of this Regulation commits an offence.

PART 9 FOREIGN CURRENCY LOANS AND VARIABLE RATE LOANS

Foreign currency loans

• (a) the consumer has a right, if conditions specified by the creditor are met, to convert the credit agreement into an alternative currency, or

• (b) there are other arrangements in place to limit the exchange rate risk to which the consumer is exposed under the credit agreement.

• (2) The creditor may specify the alternative currency referred to in paragraph (1), but it shall be either—

• (a) one of the following—

• (i) the currency in which the consumer primarily receives income or holds assets from which the credit is to be repaid, as indicated at the time the most recent creditworthiness assessment in relation to the credit agreement was made; or

• (ii) the currency of the EEA Member State in which the consumer either was resident at the time the credit agreement was concluded or is currently resident,

or

• (b) both of what is referred to in subparagraph (a)(i) and (ii), that is to say the creditor may specify that the consumer shall be allowed choose which of them shall apply for the purposes of paragraph (1).

• (3) The reference in paragraph (1)(b) to other arrangements shall be construed as including a reference to—

• (a) a limit on the amounts that the consumer has to pay under the credit agreement, or

• (b) a risk warning, where such a warning would be sufficient to limit the exchange rate risk to which the consumer is exposed.

• (4) Where a consumer has a right to convert the credit agreement into an alternative currency in accordance with paragraph (1)(a), the exchange rate at which the conversion is carried out shall be the market exchange rate applicable on the day of application for conversion, unless otherwise specified in the credit agreement.

• (5) The creditor shall warn the consumer who is a party to a foreign currency loan, on a regular basis on paper or on another durable medium, at least where—

• (a) the value of the total amount payable by the consumer which remains outstanding or

• (b) the regular instalments,

varies by more than 20 per cent from what it would be if the exchange rate between the currency of the credit agreement and the currency of the State applicable at the time of the conclusion of the credit agreement were applied.

• (6) The warning provided for in paragraph (5) shall—

• (a) inform the consumer of a rise in the total amount payable by the consumer,

• (b) set out, where applicable, the right to convert to an alternative currency and the conditions for doing so, and

• (c) explain any other applicable mechanism for limiting the exchange rate risk to which the consumer is exposed.

• (7) The arrangements applicable under this Regulation shall be disclosed to the consumer in the ESIS and in the credit agreement. Where there is no provision in the credit agreement to limit the exchange rate risk to which the consumer is exposed to a fluctuation in the exchange rate of less than 20 per cent, the ESIS shall include an illustrative example of the impact of a 20 per cent fluctuation in the exchange rate.

• (8) A creditor who contravenes a provision of this Regulation commits an offence.

Variable rate credits

• (a) any indexes or reference rates used to calculate the borrowing rate are clear, accessible, objective and verifiable by the parties to the credit agreement and the Central Bank; and

• (b) historical records of indexes for calculating the borrowing rates are maintained by the creditor.

• (2) A creditor who contravenes a provision of this Regulation commits an offence.

PART 10 SOUND EXECUTION OF CREDIT AGREEMENTS AND RELATED RIGHTS

Early repayment

• (2) A creditor shall be entitled to fair and objective compensation, where justified, for possible costs directly linked to the early repayment, but shall not impose a sanction on the consumer, and any such compensation shall not exceed the financial loss of the creditor.

• (3) Notwithstanding paragraph (2) and without prejudice to paragraph (4), a creditor’s entitlement to compensation under this Regulation shall arise only in the circumstances where the borrowing rate provided for in the credit agreement:-

• (a) may not be changed, or

• (b) may not be changed over a period of at least one year, or

• (c) may not, for a period of at least five years, exceed the rate applicable on the date of the making of the credit agreement by more than two percent.

• (4) A creditor shall not in any event be entitled to compensation under this Regulation in respect of—

• (a) subject to subparagraph (b), any period of the credit agreement that remains after early repayment,

• (b) if the case is one falling within subparagraph (b) or (c) of paragraph (3) and the early repayment occurs before the expiry of the period referred to in that subparagraph, any period of the credit agreement that remains after the expiry of the period so referred to.

• (5) Where a consumer seeks to discharge his or her obligations under a credit agreement prior to the expiry of the agreement, the creditor shall provide to the consumer without delay after receipt of the request, on paper or on another durable medium, the information necessary to consider that option. That information shall at least quantify the implications for the consumer of discharging his or her obligations prior to the expiry of the credit agreement and clearly set out any assumptions used. Any assumptions used shall be reasonable and justifiable.

• (6) A creditor who contravenes a provision of this Regulation commits an offence.

Flexible and reliable markets

• (2) A creditor who contravenes paragraph (1) commits an offence.

Information concerning changes in the borrowing rate

• (2) Where changes in the borrowing rate are determined by way of auction on the capital markets and it is therefore impossible for the creditor to inform the consumer of any change before the change takes effect, the creditor shall, in good time before the auction, inform the consumer on paper or on another durable medium of the upcoming procedure and provide an indication of how the borrowing rate could be affected.

• (3) A creditor who contravenes a provision of this Regulation commits an offence.

Arrears and proceedings for possession

• (2) Any charge that a creditor may impose on a consumer arising from the consumer’s default, subject to the provisions of section 149 of the Consumer Credit Act 1995 and any requirements that may be imposed by the Central Bank from time to time, shall be no greater than is necessary to compensate the creditor for the costs it has incurred as a result of the default.

• (3) For the avoidance of doubt, the parties to a credit agreement are not prevented from expressly agreeing that the return or transfer to the creditor of the security, or proceeds from the sale of the security, is sufficient to repay the credit.

• (4) Where the price obtained for the secured immovable property affects the amount owed by the consumer under the credit agreement, the creditor shall ensure as far as is reasonably practicable that the secured immovable property is sold at the best price reasonably obtainable.

• (5) Where, after possession proceedings, an outstanding debt remains, the creditor shall, in order to protect the consumer, put in place measures to facilitate repayment of the outstanding debt by the consumer.

• (6) At a minimum, any such measure shall have regard to guidelines on a reasonable standard of living and reasonable living expenses for debtors as issued by the Insolvency Service of Ireland under section 23 of the Personal Insolvency Act 2012 , and shall also be such as to not reduce the debtor’s assets to a level below that set out in section 26 of that Act.

• (7) A creditor who contravenes a provision of this Regulation commits an offence.

PART 11 REQUIREMENTS FOR ESTABLISHMENT AND SUPERVISION OF MORTGAGE CREDIT INTERMEDIARIES

Authorisation of mortgage credit intermediaries

• (a) Article 29 of the Directive with respect to the admission by the Central Bank of a person to carry out the credit intermediation activities referred to in the definition of “mortgage credit intermediary” in Regulation 4 (being the expression, in these Regulations, that corresponds to the expression, “credit intermediary”, set out in point 5 of Article 4 of the Directive), and

• (b) certain other Articles of the Directive related to that Article 29.

• (2) A person, other than a person—

• (a) referred to in Regulation 31(13), or

• (b) admitted pursuant to Article 29 of the Directive in another EEA Member State,

shall not carry out the credit intermediation activities referred to in the definition of “mortgage credit intermediary” in Regulation 4 or provide advisory services unless-

• (i) the person is the holder of an authorisation (“mortgage credit intermediary’s authorisation”) granted for that purpose by the Central Bank, and

• (ii) the person holds an appointment in writing from each undertaking for which the person is an intermediary.

• (3) In addition to the requirements provided for in Regulation 10, the authorisation of a mortgage credit intermediary under this Regulation shall be subject to fulfilment of the following professional requirements-

• (a) the mortgage credit intermediary shall hold professional indemnity insurance covering the territories in which the intermediary offers services, or some other comparable guarantee against liability arising from professional negligence in accordance with the Directive;

• (b) each of the following—

• (i) a natural person established as a mortgage credit intermediary,

• (ii) the members of the board of a mortgage credit intermediary established as a legal person, and