In part of the section with which we were dealing generally up to this, we do not seem to have made much provision in the case of mortgages for warnings where things go off the rails. Do the earlier provisions on default apply to housing loans — the provisions about ten days notice before action is taken?

Those provisions do not apply to mortgages.

What protection do we provide for mortgages in this area?

Is the Deputy speaking about the cooling off period?

We provided that before a lender took enforcement action against a borrower for failure to pay on time, the borrower is given ten or 20 days notice. My recollection was that under section 51 which deals with matters arising on the termination of credit agreements or on default, we exempted housing loans from all of those provisions. I expected that at some point when dealing with housing loans we would enact similar provisions about warning the consumer and having limitations on enforcement and other protections which from a consumer's point of view are probably more crucial in the case of a house than in the case of some of these other agreements.

Is the Deputy talking about when a borrower has arrears?

Yes. Sections 53 and 54 set out limitations on the creditor's right of enforcement and the obligation to serve on the consumer notice of certain things, detailing what action he might take and giving the consumer an opportunity to respond to that warning.

The reality is that the creditor acts within a month if a borrower defaults. The Deputy is saying that there is no particular warning.

Those sections are good and are seen to be balanced and fair. Most people would regard their housing loans as the biggest financial commitment of their life.

In the case of a housing loan if it is an annuity the borrower knows when it is to be paid, monthly or quarterly or according to whatever arrangements are entered into. If a borrower defaults in one month he or she is informed of it. The local authorities might leave it about three months but another lending agency will contact the borrower immediately if he or she goes into arrears. Their computer systems highlight the name of the borrower in default. Does the Deputy want the borrower to be told?

I thought there would be some provision to serve a notice 10 days before the lender proposes to take any action, that the notice will include a statement of the action the lender intends to take to enforce the terms of the agreement, the manner and circumstances in which he intends to take such action and the date.

Is the Deputy talking about informing the borrower that he has gone into arrears?

Yes, and that the creditor proposes to take action to deal with it.

Could this matter not be addressed by way of amendment on Report Stage?

Perhaps it could, but I was interested to know whether there was a persuasive reason why we did not have some provision like this.

The only persuasive reason was that as we understand it, financial houses let the borrower know very quickly that he or she has gone into arrears. Their computers and technology allows them to point up immediately somebody who is in arrears. The previous sections dealt with circumstances in which that type of network was not available to the lender. I know the Deputy is coming at it from the consumer point of view that it is desirable that consumers be alerted early to the fact that they are in arrears. We need not have any doubt that the lender will let them know that anyway.

They should also be warned of the consequences of their arrears.

Remember the original warning that if the borrower defaults on repayments he or she may lose their home. It is a question of how many times this warning is repeated. Deputy McDowell described me as overly paternalistic. How often should the warning be repeated?

The main warning should be when the lender is going to do something. I will look at it for Report Stage on the Chairman's advice.