Priority Questions

Central Bank of Ireland Investigations

Michael McGrath


29. Deputy Michael McGrath asked the Minister for Finance if he will provide an estimate of the number of mortgages identified as part of the Central Bank investigation into tracker mortgages whereby the customer was wrongly denied his or her right to a tracker rate or the incorrect tracker rate was applied; his views on the widespread nature of this practice; and if he will make a statement on the matter. [1892/17]

Pearse Doherty


30. Deputy Pearse Doherty asked the Minister for Finance the way in which he will ensure that those responsible are held accountable for the financial and social distress caused by their removal of the right to a tracker mortgage to thousands of families; and if he will make a statement on the matter. [1986/17]

My question relates to the Central Bank probe into the fact that thousands of customers were denied the right to return to a tracker interest rate and many others were denied the right to be on the correct tracker rate. The Governor of the Central Bank, when he came before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and the Taoiseach, acknowledged that the figure could be as high as 15,000 customers. I ask the Minister to provide an update to the House on that matter and to outline his views on the systemic and widespread nature of this enormous problem which affects thousands of customers in Ireland.

My question focuses on accountability. How will we hold individuals, rather than those at an institutional level, who were involved in a major and wide-scale theft of people's money to account? Up to 15,000 individuals over a number of years were affected. The amount of money that would have been at risk is close to, if not in excess of €500 million, if customers had not identified the issue and proceeded with cases to the Financial Services Ombudsman and others. What steps will the Oireachtas take to ensure that there is individual accountability for those involved in this practice in financial institutions?

I propose to take Questions Nos. 29 and 30 together.

As Deputies are aware, the Central Bank has commenced an industry-wide examination of tracker mortgage-related issues covering, among other things, transparency of communications with and contractual rights of tracker mortgage customers. The examination is ongoing, and while all lenders are currently in the process of carrying out their internal reviews it is important to note that some lenders may have their internal reviews completed sooner than others depending on the size of their mortgage books and the complexities associated with them completing the examination.  

Last month, the Central Bank issued a statement which indicated that so far lenders had identified approximately 8,200 accounts where a right to, or the option of, a tracker rate of interest and-or the correct tracker rate of interest was not provided to customers in accordance with lenders' contractual or regulatory requirements. In his subsequent appearance before the Oireachtas joint committee, the Governor indicated that this was a lower-band figure and that it was expected that the number of affected cases would be higher. The Central Bank continues to challenge lenders to ensure that progress is being made, but at this point there is no further update to hand on the information provided by the Governor on 20 December last.

In the performance of its supervisory functions, the bank identified and pursued issues in regard to transparency with specific lenders 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 the fixed-rate period. However, as new issues continued to emerge, the Central Bank decided that a system-wide review was necessary to ensure that all lenders are acting in their customers' best interests. As a result, the tracker mortgage examination was commenced by the Central Bank in 2015. This examination is now the most significant supervisory review the Central Bank has undertaken in the context of its consumer protection mandate.   

As the statutory enforcement authority for regulated financial services providers, it is the independent responsibility of the Central Bank to ensure appropriate institutional and individual accountability where there is sufficient evidence to support such action. As Minister, I do not have any function in such considerations. Nevertheless, the Central Bank has indicated it will take appropriate supervisory action, including enforcement action against lenders and persons concerned in the management of those lenders, where relevant, to ensure that fair outcomes are achieved for consumers where applicable regulatory standards are not met. The Central Bank recently entered into a settlement agreement with Springboard Mortgages limited, issuing a reprimand and imposing a fine of €4.5 million. However, the Central Bank has advised me that it cannot comment on ongoing enforcement investigations. 

The Central Bank continues to monitor lenders' progress in respect of the conduct of the examination through direct engagement with each lender and its appointed external independent party and through on-site reviews and review of regular progress reporting. The bank is committed to providing regular progress updates on the examination and these will be available on its website.

I thank the Minister for his reply. The numbers which emerged during the course of the hearing to which I referred are much higher because the figure of 8,200 excludes customers from Permanent TSB and an older Bank of Ireland issue going back to 2011. The Governor acknowledged that 15,000 mortgage customers could be affected.

I would like to know how the same mistake was made by AIB, Bank of Ireland, Permanent TSB and Ulster Bank. We know what happened in some banks, but we do not know about other lenders. This was systemic and widespread across all of the main lenders in the State. Why, when these mistakes happen, do they always happen in a manner that is adverse to the customer?

Serious questions need to be asked and answered because this is a scandal. Mortgage customers have been treated disgracefully, and the Central Bank will have to fully exercise its statutory power in order to ensure that this issue is dealt with comprehensively. Fundamentally, we need to know how this happened, why it happened and who knew about it because the issue was widespread, which the Governor accepted.

It is a very serious situation, as the Deputy has outlined. It is worse than was described by Deputy Michael McGrath. Some 15 lenders are covered by the inquiry including Bank of Ireland, Permanent TSB, AIB, Ulster Bank, KBC, ACC Loan Management, Bank of Scotland, Danske Bank, Dilosk limited, Irish Bank Resolution Corporation limited, Leeds Building Society, Pepper Asset Servicing, Springboard Mortgages limited, Start Mortgages limited and Stepstone Mortgage Funding limited.

The Central Bank is inquiring into all of them and it will be up to it to come forward with proposals, but it stretches the bounds of coincidence that all these institutions would have arrived separately at a conclusion to proceed incorrectly.

I have raised this issue with every bank that appeared before our committee, the Central Bank and the Taoiseach. This is one of the biggest financial scandals that we have witnessed in recent times. The amount of money involved is massive. In excess of €100 million, and probably in excess of €200 million, will have to be restored by the banks, and that is just to give them back the money that the banks illegally took from them. It is a massive theft. I use that word for a reason. When we speak of redress schemes, we legitimise the fact that the banks say that it was a systems error or a problem with communication. That is not the case. Every single major bank in the State was doing the same thing. They took money they should not have taken from their customers.

Not only did they do that but they took the houses from a number of individuals. We estimate that more than 100 individuals have lost their family homes as a result of the actions of the banks. Others were bankrupted as a result of the process. What has happened is unbelievable, yet for many years the Central Bank did not pick up on it. Banks that we own fought their customers when they tried to raise this issue in the public domain. When they took it to the Financial Services Ombudsman, Permanent TSB, which the State owns, fought them in the High Court. When the High Court said that it agreed with the Financial Services Ombudsman and the customer, the bank said it would appeal to the Supreme Court.

The Central Bank needs to do its job. It needs to keep a proper eye on banks such as these which have swindled their own customers. It also needs to ensure that individuals are held to account. However, what has the Minister, who is the major shareholder in the banks, done? Has he asked the board of AIB why AIB took from 2,600 customers money that was not its money in the first place? Has he asked why it took the homes of some of our citizens when it should not have done so? Has he asked if there is any internal investigation being carried out to see if there are culpable individuals relating to this matter?

These are not private firms in the IFSC. Some of them are banks that we own. However, until we have individual accountability instead of a fine that is issued by the Central Bank, this practice will continue.

I agree with many of the sentiments expressed by the Deputy. The Central Bank is carrying out a full inquiry across the lenders that I have specified. It has already reached agreement on a fine of €4.5 million with one lender, which is not a household name, and it is proceeding now with regard to others. It expects to have made significant progress by mid-2017. I know the Governor informed the Deputy when he asked whether the number of those affected could be as high as 15,000 that it might be, but he also said that he thought that might be a high estimate. However, it certainly will be more than 8,500.

As far as the role of the Minister for Finance is concerned, the Central Bank is independent under statute in the exercise of its functions. Any separate or parallel action by the Minister for Finance would be an interference in the independence of the Central Bank. I share the Deputy's sentiments, however. This was an outrageous situation. It is important to put on the record that the Central Bank has statutory reporting obligations to the Garda Síochána and to other agencies where it suspects a criminal offence may have been committed by a supervised entity. The Central Bank takes these obligations seriously and complies with them on an ongoing basis, as appropriate. However, this would be a matter for the Central Bank and the independent criminal investigation and prosecution authorities. I, as Minister for Finance, would not have any role in the matter.

I appeal to the two Members as our time is almost up and I want to give both of them fair play. I ask them to keep their supplementary contributions as brief as they can as I want to give the Minister a chance to reply.

Unless there is genuine accountability for how this scandal happened, how it was allowed to continue and why it was not dealt with more quickly by the Central Bank, this will keep happening. The reality is that it is the customers who ultimately lose out. Many have lost their homes and many thousands of others continue to pay with each passing month hundreds of euro extra in interest that they should not be paying. That remains the case today in respect of customers that the banks know should be on a tracker rate.

Banks are saying that the tracker rate should be 3.67%. The tracker rate these people are being put back on is basically the variable rate. This is still going on and it is going on under the nose of the Central Bank, but there is no sense of urgency. I got no sense of urgency from the Central Bank when its delegates appeared before the committee in December. There are no deadlines for the banks to reinstate tracker rates to customers who were wrongly denied them. This is simply not good enough. The same people always end up losing and, unless there is accountability, it will keep on happening on our watch.

I respect the role of the Central Bank in terms of its regulation and the investigation it is carrying out, but that does not absolve the Minister for Finance. As the major shareholder in AIB and Permanent TSB, why is he not asking the board what for God it was doing when it stole all this money from 4,000 citizens and made some of them homeless? That is a responsibility, but it is also the human thing to do. This cannot be allowed to go unchecked but, unfortunately, it has until now. This story did not just emerge in the past few days. This has been going on for years and people have turned a blind eye to it, including those in the Central Bank. Now we find that it is not confined to the 86 customers that had cases before the Financial Services Ombudsman but possibly affects up to 15,000 individuals.

The Criminal Justice (Theft and Fraud Offences) Act 2001 is clear. It states: "A person who dishonestly, with the intention of making a gain for himself or herself or another, or of causing loss to another, by any deception induces another to do or refrain from doing an act is guilty of an offence." That offence is punishable by up to five years in prison. I could put any money on it with the Minister, and I hope I am wrong, but not one banker will be held accountable for what has happened.

Now is the time to introduce robust white-collar crime legislation to ensure that bankers know that they will face the full rigours of the law if they do this to any one of our citizens or anyone else again.

We are way over time. I call the Minister to give a brief response.

The Central Bank has strong powers. The committee of the House invited the Governor of the Central Bank to attend one of its meetings and I understand the Governor had a good exchange with Deputy Pearse Doherty on 19 December. From reports in the media, that seemed to have been a satisfactory meeting.

My information from the Central Bank is that, based on current progress, it anticipates that relevant lenders will have been identified and engagement commenced with impacted customers by mid-2017, with payment of redress and compensation, processing and consideration of any appeals and the Central Bank's own assurance work continuing beyond this point for some lenders. The Central Bank therefore expects to see more lenders engaging with impacted customers over the next few months. It states that it was mid-2015 when it extended its inquiry and realised the seriousness of events and that it is proceeding with all expedition to sort it out.

If, as the Deputies stated, there are up to 15,000 individual customers, it will take a pretty long time to sort it out. However, it is being sorted out. We will see what conclusion the Central Bank reaches and whether it exercises its powers to refer this to the Garda Síochána. However, that is a matter for the Central Bank, which does not lack power. We always have an argument about people not having sufficient power. The Central Bank has plenty of power. The power is there and it is using it.

I thought my flexibility was generous but it obviously was not generous enough. I will, therefore, be strict with the time as we move on.

State Banking Sector

Michael McGrath


31. Deputy Michael McGrath asked the Minister for Finance his plans to proceed with the sale of a stake in a bank (details supplied) in the course of 2017; the factors that will influence his decision; and if he will make a statement on the matter. [1893/17]

The purpose of the question is to seek clarity on the Minister's plans for a sale of a stake in Allied Irish Banks in 2017. Is it a Government objective to proceed with the sale of a stake this year? What factors will the Minister take into account in making a final decision on AIB and bringing a proposal to Government in the matter?

The State's shareholding in Allied Irish Banks is a valuable asset and it is the Government's intention that the State will exit this and our other banking investments in a measured and careful manner.

The advice I have received confirms that an initial public offering, IPO, is the optimal route to recouping value from this investment. Officials in my Department along with our independent financial adviser, Rothschild, have done considerable preparatory work in this regard. In December of last year, following a competitive procurement process, three investment banks were appointed to act as global co-ordinators on a potential selling syndicate in preparation for a possible IPO. These banks have been appointed for an 18 month period and additional banks will be appointed to fill out the syndicate at an appropriate future date.

A number of factors will need be taken into consideration before a decision is made to proceed with an IPO. These include the operational performance of the bank, the preparedness of the bank for privatisation and whether market conditions are conducive to achieving our long-term objectives. As I have stated previously, my primary objective in the disposal of any AIB shares will be to maximise the return for the State in a manner that is consistent with recovering our full €20.7 billion investment.

The reorganisation of the bank's capital structure in 2015 and the maturing of the CoCo instrument in July of last year have given AIB a simplified market-facing balance sheet. I welcome the bank's continued strong performance, demonstrating sustainable profitability and strong capital generation over a number of consecutive reporting periods. The bank's chief executive officer has indicated publicly, and reiterated to me personally, that much of the internal preparation that would be required in advance of launching an IPO process has now been completed. I also note comments made recently by the bank's chairman indicating that AIB may be approaching a time when the board will be in a position to consider the payment of a prudent dividend, in consultation with the regulator, which would contribute to the bank's strong investment case.

In order for us to proceed with the sale of any of our banking assets, we need to be satisfied that the market is prepared to put a fair and reasonable value on the business, bearing in mind its current performance, its future prospects and the outlook for the economy. Officials in my Department continue to monitor market conditions and the performance of banking equities on an ongoing basis. While I cannot predict what market conditions will be like for bank shares over the coming year, it is our intention to be ready to execute a transaction if conditions allow. Given the improved state of the national accounts, progress made in reducing our national debt and positive market sentiment towards Ireland, we are not under any pressure to monetise our banking investments. As a result we have some flexibility around when we time our disposals in the market.

I thank the Minister for his reply. He indicated that it is intended to proceed with an IPO if market conditions allow and are favourable. I assume that is the Government's position. It would be a policy decision as to how much of the Government's stake in AIB it would sell. Has the Minister given consideration to that issue or is it a matter on which he will take advice? Does he have any estimate at this stage of-----

It will be around 25% of the State's shareholding.

Does the Minister have an estimate of the likely proceeds from the sale of such a stake? In some respects, the valuations available to us are meaningless because there is no active market in the trading of AIB shares because the State owns approximately 99.8% of them. Will the Minister confirm that the proceeds of such a sale would be used to pay down debt and that, as a financial transaction, he would not have any additional leeway under the fiscal rules to increase expenditure on the back of one-off proceeds from a sale?

I thank the Deputy. At the end of 2015, the Irish Strategic Investment Fund valued the State's 99.9% shareholding in AIB at €12.2 billion. The value of shares in banks all over the world fell considerably thereafter, although, as the Deputy will be aware, there has been a recovery in recent months. For example, both Bank of Ireland and Permanent TSB, for which there are accurate quotations on the market, are now trading well above the lows experienced during 2016. The value of the former has appreciated by 52% and that of the latter by 81%. There is, therefore, an indication that we might achieve the kind of values we would require.

No final decision has been taken. We have appointed a syndicate and I am getting financial advice on an ongoing basis. A number of events will be necessary before we would proceed. There is the issue of a dividend, which must be sanctioned by the regulator in Frankfurt, and would probably enhance value somewhat. In addition, the annual returns of AIB, which are due out in March, will give an indication to the market of the profitability of the bank. I will keep the Deputy informed.

There is a high degree of uncertainty in the markets and some volatility linked with international developments. There are also some question marks about the underlying health of certain European banks. We are all well aware, for example, of the problems with Italian banks and it is not yet clear how these will play out. At this remove, early in 2017, when will be the opportune time to make the assessment of the right time to proceed with an IPO for AIB? As the Minister noted, there are certain windows in the calendar year during which we will not have an opportunity to proceed with an IPO because of reporting requirements and so forth. If he does not make a decision early in the year, will he revise his assessment in the autumn and take advice from the professionals he has brought on board?

On values, there was an increase in the value of small bank shares in the United States after the election of Donald Trump. In addition, the big factor on valuation now is whether interest rates have bottomed and will increase in the coming period. Obviously, increases in interest rates connect to the profitability of banks and there is an expectation in the markets of rising interest rates. Among other reasons, this is why bank shares are trading at a higher level than they did in 2016. There is a window from late May until June but it is hard to be precise on the opening and closed positions. There is another window in the autumn so it will be one or the other.

Tax Code

Joan Burton


32. Deputy Joan Burton asked the Minister for Finance the measures he has put in place in order that so-called vulture funds pay both corporation tax and capital gains tax at full rate; if he will provide an estimate of the additional revenue he expects for the Exchequer in each of the years 2017, 2018 and 2019 from the closure of loopholes that enabled these funds to avoid taxation; and if he will make a statement on the matter. [1806/17]

The question asks what will be the effective tax yield on a yearly basis from the changes the Minister introduced in the Finance Act on the taxation of vulture funds and the closure of loopholes which have allowed many such funds to pay little or no tax. Will the Minister advise if any of these funds contributed any corporation or capital gains taxation to the Exchequer prior to the enactment of the Finance Act? Is it true that they have been effectively entirely free from taxation?

The Finance Act 2016 brought into force amendments to address the use of certain structures by companies which fall within section 110 of the Taxes Consolidation Act 1997 and structures used by certain funds involved in property transactions.

Throughout the course of the Finance Bill process, there was extensive debate on both the amendment to section 110 and also on the introduction of a new taxation regime for investment undertakings holding Irish property. The amendments made deal with concerns and issues which had been raised in the Dáil and the media throughout 2016 regarding the possible use of aggressive tax practices by certain structures to avoid paying tax on Irish property transactions.

Both amendments are targeted. Section 110 has been tightened to prevent any misuse of the legislation. The measure has the effect that, for the purposes of section 110, the use of profit participating loans will be restricted where they are used by qualifying companies relating to Irish property transactions. The amendment will ensure tax will be payable by section 110 companies on their profits from Irish property transactions from 6 September 2016 onwards. The section 110 companies will pay 25% tax on all of their realised accounting profits and gains from Irish property-related transactions.

The new Irish real estate fund legislation addresses the issue of non-resident investors who have been investing in Irish property through fund structures and thus avoiding a charge to Irish tax on profits arising from Irish real estate.

In regard to the two measures, €50 million was included in budget 2017.

This amount is based on intensive analysis undertaken by Revenue.  As stated during the extensive Committee Stage debate on this topic, the €50 million is both conservative and prudent.

As also discussed at length, this new legislation will trigger behavioural changes that cannot be predicted.  Furthermore, to estimate the yield from these amendments into the future requires predicting changes in property prices.  This, coupled with the behavioural changes, means it would be premature for the Department or the Revenue Commissioners to estimate any potential yield beyond 2017.

It is disappointing that the Minister has not been prepared to identify the likely yield from the taxation of these companies. The practice of these companies is very often to drive up rents, which they have already done in the Irish market in a significant way and to focus on relatively short-term to medium-term investment timeframes of five to seven years. If that is the outturn, this means there is a very narrow window of opportunity for the Exchequer to ensure that taxation is paid by these companies. As I said, they have been to the fore in raising rents, as well as buying properties cheaply. Does the Minister propose to introduce further legislation to normalise the activities of these companies and to restrict their extreme profit-taking from the Exchequer?

It would be incorrect to assume that we can tax these assets because we do not tax assets. I presume the Deputy is talking about tax on the income stream in respect of rent-mortgage repayments or capital gains tax. One or the other would be subject to tax. The first move by investment companies of this nature is to seek to change behaviour to either eliminate or reduce their tax liability. We know that there are changes in this behaviour already. As I said, those that continue in the business will be taxed at 25%.

Capital gains tax is a feature of the property price. Property prices are increasing. This means there would be additional capital gains to be paid as property prices continue to rise, such that to predict what tax might be payable by any individual fund by 2018 or 2019 is not possible. The Revenue Commissioners have estimated the amount to be paid in 2017 will be €50 million, which amount they say is conservative and prudent. I hope it will be exceeded. As I said, there are changes in behaviour already under way. Most of the bulk buying of Irish property commenced in 2014. The Deputy will be aware that under tax law these companies must file their returns by September 2015, such that they were operating for 21 months in some cases before the Revenue was given the data on which it could make assumptions. In late 2015, the Revenue began to suspect there was something untoward happening in regard to the application of section 110, which was legitimately introduced for the financial services industry. It then informed my Department of the position in early 2016. It was a difficult issue to address but we worked hard on it and as soon as we had a solution we published it ahead of the Finance Bill in September 2016.

The Minister said that behavioural changes have already commenced. It would be helpful to the House if the Minister could identify those behavioural changes. For instance, are the companies experiencing some kind of conversion to corporate social responsibility in terms of their making a contribution to the Exchequer in respect of properties which they bought cheaply? While some of these properties are being refurbished and improved these companies have played a major role in rising rent costs in respect of which presumably they are making a killing. It is on that basis that I believe the figure provided by the Minister is very conservative.

I note that one of the companies, Kennedy Wilson, wrote to the Minister about five days prior to the budget announcement. It would be helpful to the House if the Minister would enlighten us as to the reason a number of specific points in Kennedy Wilson's correspondence to the Minister, which was a potentially influential letter five days prior to announcement of the budget, are redacted. I have difficulty understanding why that should be the case. This is a matter of enormous public interest in the context of the housing crisis and as such the House deserves to be given full information.

The draft legislation was published well before the budget. The Deputy will recall that it was published in September and that it was accompanied by a statement inviting observations on the legislation. It was published as draft legislation subject to consultation. As such it was no cause of wonder that interested parties and their legal representatives or tax advisers contacted the Department of Finance. That is normal practice. I do not control the release of information under freedom of information requests. I read in the newspaper about the Kennedy Wilson letter. It would not have crossed my desk at the point of release because freedom of information is separate from the Minister. It is normal practice that information deemed to be commercially sensitive information that would injure third parties would be redacted. Having been a Minister for a number of years and been subject to freedom of information requests, Deputy Burton will be aware that such requests would not have come across her desk but would have been dealt with by the designated officers in her Department.

I am reluctant to interrupt Members but I must do so if they do not adhere to time limits as this results in other Members not having their questions answered. I will be flexible but if I am to give every Member a fair crack of the whip others will have to be brief.

Loan Books Purchasers

Michael McGrath


33. Deputy Michael McGrath asked the Minister for Finance his plans to introduce further protections for mortgage holders and SMEs whose loans have been sold to unregulated loan owners, including so-called vulture funds; his further plans to bring these funds fully within the ambit of financial regulation; and if he will make a statement on the matter. [1894/17]

I am sure the Minister saw the RTE documentary, "The Great Irish Sell Off", which dealt with the sale of mortgage loans and SME loans to so-called vulture funds and the growing concerns among those in the farming community who are trying to negotiate some way forward with some of the vulture funds that own their loans. The Minister and I disagree on whether there is a need to strengthen protections for mortgage holders and business owners whose loans are owned by such funds. I believe there is a need to strengthen these protections, which the Government signed up to doing in its programme for Government. What are the Minister's intentions in this regard?

As the Deputy will be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 was enacted in July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The Act introduced a regulatory regime for a new type of entity, known as a credit servicing firm. Credit servicing firms are now subject to the provisions of Irish financial services law that apply to regulated financial service providers.

Under the Act, purchasers of loan books must either be regulated by the Central Bank or the loans must be serviced by a credit servicing firm regulated by the Central Bank. The significant point is that we regulate at the point of contact with the customer. Therefore, relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes such as the consumer protection code and the code of conduct on mortgage arrears issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015, which came into operation in July 2016. It is important to highlight that the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.

The Central Bank is now the competent authority for the authorisation and supervision of credit-servicing firms.

Credit-servicing firms must comply with all relevant requirements of financial services legislation, including the various codes and regulations mentioned already and fitness and probity standards, including minimum competency requirements.

In addition to compliance with Central Bank codes of conduct, credit-servicing firms will have to demonstrate to the Central Bank that they have robust governance and adequate resources to ensure compliance; agreements with loan owners that enable the credit-servicing firm to fully comply with its obligations under Irish financial services legislation; and adequate and effective control of loan servicing in the State to enable Central Bank oversight.

Additional information not given on the floor of the House

In addition, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 ensures that a regulated credit-servicing firm cannot do something, or fail to do something, which would be a prescribed contravention if performed, or not performed, by a retail credit firm. The legislation also prevents the owner of credit from instructing a regulated credit-servicing firm to perform such an action. Therefore the borrower is protected because the owner cannot give an instruction that would breach the rules but also the instruction cannot be implemented by the regulated credit servicer, over whom the Central Bank has oversight as a regulated entity.

Nonetheless, my Department will continue to keep all relevant legislation under review in order to ensure that borrowers whose loans have been sold are properly protected and do not lose any protections which they previously enjoyed. In addition, the Department of Finance expects that the Central Bank, as regulator of credit-servicing firms, will be vigilant in this area and raise any specific instances where it has found consumers have not had their protections upheld or that their positions have been disadvantaged.

I thank the Minister. There is one example that really sums up what is wrong in all this. I have a letter here from Maris Capital to a mortgage holder stating two firms have been appointed as the credit-service firms. The contact details are given as a PO box number in Dublin 2. There is no address given for the credit-servicing firms and no telephone number to contact. If one is in difficulty with one's mortgage, one wants to deal with the people who can make a final decision on the restructuring of one's loan, be one a mortgage holder, farmer, SME or otherwise. Under the existing legislation, however, there is a gap. One cannot have any direct contact with the loan owner, or the person making the final decision on whether to move in on the borrower, enforce the security, restructure the loan or raise the interest rate. Restructuring is simply not happening when it comes to funds because they have no interest in the longer term. They are here to get their hands on the underlying asset ultimately or to sell on the loans. That is the prospect that is now working itself out in the marketplace. This is just a simple example of what is wrong with the current system of regulation. It is not acceptable that funds, which call all the shots in regard to loans, remain beyond the ambit of regulation. The Minister needs to deal with that or this House will move to do so - this year, in my view.

I am not sure whether the letter the Deputy alluded to complies with the legal position. In the first instance, I invite him to contact the Governor of the Central Bank to ascertain whether it does comply with the legislation. Second, if the Deputy lists for me the difficulties with the current legislation, I will engage with him and put civil servants at his disposal to draft amending legislation. My problem is that the legislation introduced last year deals with the intermediary who contacts the borrower on behalf of the loan owner. That seemed to cover it. To make doubly sure, if the owner directs the intermediary in any way on how to proceed, the owner is subject to the legislation because his status transfers from hands-off owner to someone who is carrying out the work of the intermediary. Thus, he is caught under the legislation also.

The Deputy has raised this on a number of occasions. I invite him to write or talk to me about his precise concerns. I am amenable to introducing amending legislation to the Act introduced last year. If it needs to be extended to owners, it will be. I am at a loss and my advice is not in accord with what the Deputy is recommending. Despite that, I have sympathy with his point of view. If we could proceed on that basis, I will do so.

I sent this letter to the Central Bank, to the Director of Consumer Protection. It is all in order under the credit-servicing legislation of 2015. A loan owner can appoint as many credit-servicing firms as it wants to deal with a particular loan. That is the reality at present. The Minister has obliged the intermediary, which is typically a call centre, to be a regulated entity. I have dealt with them myself and I got the borrowers to sign letters of authorisation. The intermediary will tell me it is making a proposal to the loan owner, to the fund, for restructuring or otherwise. It is as obvious as night follows day that the decision is being made by the loan owner, the fund. Those concerned sit around a board room and decide on a whole list of cases at any given meeting. That is the practice.

One is exposing borrowers to a scenario in which their loan can be sold to anyone. All anyone has to do to comply with the law is to appoint an intermediary. I will continue to press the issue. I will engage with the Minister and his officials. I appreciate his offer. This issue is only beginning to play itself out. There are real anomalies and there is a gap in the legislation that exposes borrowers. The fundamental truth is the funds do not have an interest in longer-term restructuring of loan agreements because they are not in it for the long haul. Until we all accept and understand that, we are not going anywhere.

I will work with the Deputy and put the officials in question at his disposal. If anybody else who is particularly interested in this issue wants to engage, I will engage with him or her also.