Dáil Éireann Debate, Thursday - 18 May 2017
13. Deputy Bernard J. Durkan asked the Minister for Finance if the Central Bank will take steps to soften the manner in which original or secondary lenders treat home borrowers (details supplied); and if he will make a statement on the matter. [23571/17]
View answerWithin the remit of the Central Bank’s responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.
The Code of Conduct on Mortgage Arrears is a key part of the Central Bank’s Consumer Protection Framework in this regard. Banks, retail credit firms and credit servicing firms servicing loans on behalf of unregulated loan owners are all required to comply with the CCMA. The overriding objective of the CCMA is to ensure the fair and transparent treatment of consumers in mortgage arrears or pre-arrears, and that due regard is had to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits.
Last year I wrote to the Governor of the Central Bank to request that an assessment be undertaken of the range of available sustainable restructure solutions offered by banks and non-bank entities. The Central Bank completed its assessment and their report is published on the Department of Finance website. The assessment finds a comprehensive range of available restructuring solutions being offered and delivered by both bank and non-bank entities and notes considerable progress in addressing mortgage arrears since the peak. The Central Bank notes further that there is strong evidence that both banks and non-banks look to exhaust available restructure options before moving to the legal process. In addition, the Central Bank considers the range of restructures offered by banks to be broadly appropriate in balancing consumer protection imperatives, and maintaining a mortgage market for all borrowers, and a functioning banking system.
In referring to “secondary lenders”, the Deputy may be talking about funds to whom loans are sold. He will be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted in July 2015. It was introduced by the previous Government 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 called 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 themselves or else the loans must be serviced by a credit servicing firm that is regulated by the Central Bank. 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). It is also 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.
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 that they previously enjoyed. In addition, I expect that the Central Bank, as regulator of credit servicing firms, will be vigilant in this area and raise any specific instances where they have found consumers have not had their protections upheld or that their positions have been disadvantaged.
