Dáil Éireann Debate, Thursday - 3 April 2014
57. Deputy Pearse Doherty asked the Minister for Finance the steps he will take to make sure the potential sale of €1 billion of mortgages at ICS Building Society does not leave mortgage owners outside the protection of the code of conduct on mortgage arrears. [15757/14]
View answerAs the Deputy may be aware, in July 2013 Bank of Ireland agreed an amendment to its Restructuring Plan which had been agreed with the European Commission in respect of State Aid received by the Bank. This allowed the Bank retain its life assurance subsidiary New Ireland. As part of this amendment, the Bank committed to certain substitution measures including the sale of the ICS distribution platform together with, at the option of a purchaser, up to €1bn of mortgages and up to €1bn of matching deposits. The purpose of the ICS substitution measure is to support new entities in entering the Irish market and thereby increasing competition to the ultimate benefit of the consumer.
In order to facilitate the sale, the State committed to enact appropriate legislation, the effect of which is to extend the same powers to building societies that currently exist for banks to transfer assets and liabilities to other banks. ICS is the sole remaining building society in Ireland. Although the proposed legislative change does not preclude an unregulated entity from acquiring a portion of the ICS mortgage portfolio, the probability of such an outcome must be considered in conjunction with the purpose of the commitment and the safeguards included in the Restructuring Plan to ensure that this purpose is achieved. The Restructuring Plan includes a provision that "In order to be approved by the Commission, the purchaser must meet the Purchaser requirements" which covers, inter alia, that the Purchaser "must have the financial resources, proven expertise and incentive to maintain and develop the Divestment business as a viable and active competitive force in competition with BoI and other competitors".
With reference to the wider issue of CCMA protection for residential mortgage borrowers who have had their loans sold by a bank to an unregulated entity, the Deputy will be aware that The Sale of Loan Books to Unregulated Third Parties Bill, which is listed in the Government legislative programme, was always intended to address concerns surrounding the continued applicability of the code after the sale of loan books to unregulated entities. The Government is committed to bringing forward legislation to protect mortgage holders and will work with other interested parties to achieve the best solution for consumers. Officials in my Department are examining this fully with the Central Bank and the Attorney General's Office.
