CPC Loans & Accounts

Deposit Accounts

In relation to a term and notice deposit accounts with a balance of more than €20, a credit institution must at least annually provide a statement to the consumer which includes the following,

• opening balance,
• closing balance,
• additions and withdrawals,
• interest credited,
• charges,
• tax deducted,
• tax certificate details
• interest rates applied to other similar accounts available to the consumer from that institution
• where the term of the account is less than one year, a closing statement must be provided.

The credit institution must ensure at least 10 days prior to the maturity of a fixed term deposit that it alerts the consumer about its impending maturity and date.  This does not apply to deposits for less than 30 days.

Statements

In relation to loans, a regulated entity must at least annually provide a personal consumer with a statement of account including

• opening balance
• outstanding balance
• transactions
• interest
• all charges
• details of interest applied during the period

Credit

Prior to offering credit, a regulated entity must explain to the personal customer the effect of missing a scheduled repayment.  The implications and the effect of missing repayments must be highlighted in all credit agreement documents provided to the personal consumer. A warning must be provided in the following terms:

Warning:  If you do not meet the repayments on your credit agreement, your account will go into arrears.  This may affect your credit rating which may limit your ability to access credit in the future.

Where an application for credit is turned down the reasons for non approval must be outlined to the consumer.  This applies only to a  formal application.  If requested, the information must be provided on paper or another durable medium.

If a regulated entity offers credit on a fixed interest basis to a personal customer with an option to fix or switch to a fixed rate ,it must provide in the credit documentation a worked example of the early redemption charge in monetary terms and details in relation to its calculation.

Where credit is being offered to a personal consumer subject to a guarantee, documentation must outline the obligations of the guarantor.  It must contain a warning in the following terms:

Warning:  As a guarantor of this credit you will have to pay off the debt amount, the interest and all associated charges up to the level of your guarantee if the borrower does not do so. Before you sign this guarantee you should get independent legal advice.

Before offering, recommending, or arranging, or providing a loan to a personal consumer for the purpose of consolidating loans, a regulated entity must provide a personal consumer on paper or other durable medium with an indicative comparison of the total interest rate payable if he  continues with the existing facilities and total interest payable under  the term of the consolidated facilities.  Assumptions used must be reasonable and justifiable and must be clearly stated.

Interest Changes

A regulated entity must notify affected personal consumers on paper or durable medium of any change in interest rate in the loan.  It must include

• details of the new rate and old rate
• date rates changes
• revised payment amount
• invitation to a personal customer to contact the lender if he or she anticipates difficulties meeting the higher payment

In the case for a mortgage where the revised payment has in place under the code of conduct for mortgage arrears, the notification must clearly indicate the revised payment amount required that applies the revised new payment arrangement

A regulated entity must provide notification above at least 30 days in advance of any change in interest rate except in the following circumstances

• in the case of  tracker interest rates as soon as possible and no later than 10 days after the change in the underlying rate becomes known to the entity in the case of a mortgage loan
• in the case of other loans, a notification is not necessary provided the change in the interest rate is caused by a reference rate which changes daily or weekly or the new reference rate is publicly available by appropriate means and the information concerning the new reference rate is kept available on the premises of the entity.

Where the credit has been advanced for a personal consumer subject to a guarantee the entity must notify the guarantor on paper or a durable medium if the terms of the credit agreement change.

Tracker Rates

Where a personal consumer requests a change from an existing tracker rate or is offered an option to move to an alternative rate on an existing loan the lender must provide the personal consumer with the following information in paper or a permanent form

• indicative comparisons of the cost of the monthly loan repayments at the tracker interest-rate and alternative rates being offered
• indicative comparisons of the total cost of the loan if the tracker rate has continued and if the new rate is accepted; assumptions must be reasonable and justifiable
• details of the advantages and disadvantages for the personal consumer of the tracker interest rate compared with the other rate being offered.

There is a required form of warning where a tracker rate is abandoned

The above provision does not apply to a mortgage on a primary residence covered by the code of conduct on mortgage arrears which is in arrears or pre-arrears,

A regulated entity must allow personal consumer at least a month to consider changes above and advise the consumer of this entitlement.  Where the requirement is waived the regulated entity must receive confirmation from the consumer prior to the change coming into effect that he has been provided with the above-mentioned information, understands it and is waiving the one month period.

Where a regulated entity offers an incentive to a personal consumer on an existing mortgage, it must provide the consumer on paper with the information necessary to consider the offer.  In particular, it must quantify the implications for the consumer in availing of the incentive including a cost comparison of the total cost of the existing mortgage before or after availing of the incentive.

It must set out the length of time during which the incentive is available and the assumptions which must be reasonable and justifiable. It must  set out the advantages and disadvantages of the incentive and include other key information which the personal consumer should have available to him when considering the incentive.  It should include a statement that the personal consumer may wish to seek independent advice prior to availing of the incentive.

Where a regulated entitle operates  a website, its interest rates for mortgages must be published on the website.

Where  a regulated entity offers a mortgage to a personal consumer it must include in the offer document details as follows:

• Amount of mortgage interest rate that applies at the date of offer term.
• When the interest rate in the offer document may not be the applicable interest rate this must be highlighted.
• Length of time for which the mortgage offer is valid assuming details provided are correct and do not change.

Lifetime Mortgages

There are special provisions regarding lifetime mortgages and home reversion agreements.  A lifetime agreement mortgage is one secured on  a home where the interest is rolled up on top of capital and is repaid from the proceeds of the sale of the property.

A home reversion agreement is an agreement between a vendor and a home reversion firm that provides for the conveyance by the vendor to the home reversion firm of an estate or interest in land (which includes the principal residence of the vendor or of the vendor’s dependants) for a discounted sum or an income (or both), and for the vendor to retain the right to live in the residence until the occurrence of one or more events specified in the agreement;

Prior to offering, recommending, arranging or providing a lifetime mortgage to a personal consumer, an entity must inform the personal customer consumer of the consequences of purchasing the product. Certain information must be provided in s written format.  This includes the circumstances where the loan must be repaid, details of interest rate, explanation of the impact of roll-up effect on the existing mortgage, an indication of likely redemption, cost equivalent provisions applied to home reversion agreement.

Assumptions used in the production of the information must be reasonable and justifiable and must be clearly stated.  Before offering such a product an entity must ensure the personal consumer is made aware of the importance of seeking independent legal advice .  Certain warnings must be given in prominent format.  They must be comprised in the application form, other documents and on the entity’s website.