The code of conduct on mortgage arrears, CCMA, provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender, and that long-term resolution is sought by lenders with each of their borrowers. The Central Bank uses a number of methods to monitor compliance with consumer protection requirements, such as ongoing interaction with financial service providers and industry, themed inspections, general reviews on a particular topic, monitoring of financial services advertising, market intelligence and mystery shopping. However, where a firm is not regulated, the Central Bank is not in a position to monitor voluntary compliance with the code of conduct on mortgage arrears. As a result, the Government introduced the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 to protect consumers. When enacted, this Bill will ensure that borrowers retain the protections they had before their loan books were sold, including the protections of the code of conduct on mortgage arrears and the consumer protection code.
The Bill provides for the regulation of the activity of credit servicing and the credit servicing firms engaged in such activity.
This legislation will require all entities dealing with the consumer in this activity to be authorised by the Central Bank and subject to its codes of conduct. Owners of loan books who deal directly with consumers, that is, those who are servicing their own loan books, will be regulated. Otherwise, they can have the loan book serviced by a regulated credit servicing firm. Either way, the entity dealing with the customer will be regulated and this will ensure that borrowers retain the protections they had before their loans were sold. The Bill was passed by the Dáil on 17 June and I look forward to its discussion on Second Stage in the Seanad tomorrow, 24 June.
