Dáil Éireann Debate, Monday - 11 September 2017
199. Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to the fear and distress being caused by recent media reports of the proposed sale of a portfolio of €1.25 billion mortgage loans by a bank (details supplied); the measures he proposes to protect the homes of vulnerable families whose mortgage loan may be sold on at a discount; and if he will make a statement on the matter. [38612/17]
View answerThe proposed sale referred to in media reports appears to relate to the sale of buy-to-let mortgages rather than homeloans. Nevertheless I will address the Deputy's concern in relation to homeloans.
The Deputy will be aware that there are substantial protections in place for customers in the event that a loan is sold from the original provider to a third party. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 was enacted in July 2015 and is designed to protect borrowers in this situation. 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 who is regulated by the Central Bank.
Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 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, 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 on 1 July 2016.
The sale 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 which they previously enjoyed. In addition, the Department of Finance 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 where their positions have been disadvantaged.
In relation to tenants, landlord-tenant relations are governed by multiple pieces of legislation (mainly under the aegis of my colleague, the Minister for the Housing, Planning, Community and Local Government). The landlord/owner of the property is restricted in what they can do in relation to removal of tenants from a property. These restrictions are the same whether the landlord bought the property, built the property themselves, became a landlord as a result of renting out what was formerly a principal dwelling house or acquired the property by other means such as enforcing loans secured on the property.
As the Deputy is aware, non-performing loans (NPL's) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism (SSM). In Ireland significant progress has been made across the banking sector in reducing the level of NPLs since the financial crisis. Despite this progress, the level of NPLs in the Irish banking sector remains well above the European average. Hence the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge. This challenge will have to be met whether or not the State has a shareholding in the bank concerned.
The disposal of a loan or portfolio of loans is a commercial decision, and therefore a decision for the management and Board of each individual institution. As the deputy is aware, the relationships between the Minister for Finance and the banks in which the State is a shareholder are governed by a number of Relationship Frameworks which can be found on my department's website. The Relationship Frameworks define the 'arms-length' nature of this relationship, allowing for oversight of significant actions taken while fully preserving the commercial independence of each bank, and the fiduciary responsibilities of their management and Board. A disposal such as that referred to by the Deputy is not subject to Ministerial consent but, if the value is greater than €50m in the case of the bank referred to, is subject to Ministerial consultation.
