As the Deputy will be aware, borrowers whose loans are sold to unregulated entities will be protected by the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 when it is enacted. The purpose of the Bill is to ensure that consumers retain the protections they had prior to the sale of their loan. This Bill will require entities dealing with the consumer to be authorised by the Central Bank and subject to its Codes of Conduct. Dealing with the consumer is credit servicing and the definition of credit servicing is broad. Owners of loan books who deal directly with consumers, that is, who are servicing their own loan books, will be regulated. Otherwise they can have the loan book serviced by a regulated credit servicing firm.
All consumer and relevant SME loans sold by regulated financial institutions will be covered by this Bill. Borrowers will therefore be restored to the protections they previously had, such as the Code of Conduct on Mortgage Arrears (CCMA), the Consumer Protection Code and the Code of Conduct for Business Lending to Small and Medium Enterprises. The Code of Conduct on Mortgage Arrears requires lenders to constructively engage with borrowers to address a genuine arrears problem in respect of a mortgage secured on a primary home. In particular, the CCMA requires a lender to explore all the options for an alternative repayment arrangement offered by that lender to address a mortgage difficulty. Borrowers who previously had access to the Financial Services Ombudsman will also have this right restored by this legislation.
In addition, it should be noted 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 contract.
The Bill was published in January and second stage of the Bill was taken in the Dáil on 4 February. The Bill is continuing its progress through the legislative process. The Bill was passed by the Dáil on 17 June and I look forward to further discussion of the Bill at Second Stage in the Seanad tomorrow (24 June).