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Consumer Protection

Dáil Éireann Debate, Tuesday - 30 January 2018

Tuesday, 30 January 2018

Questions (102)

Michael McGrath

Question:

102. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the operation of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015; his views on whether unregulated loans owners such as private equity funds should be directly regulated; and if he will make a statement on the matter. [4284/18]

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Written answers

The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”) was introduced in July 2015 to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm.

The legislation ensures that relevant borrowers whose loans are sold to unregulated third parties maintain the regulatory protections they had prior to the sale. Credit servicing firms must comply with all relevant requirements of financial services legislation, including the regulatory requirements set out in the Central Bank’s statutory Codes of Conduct and Regulations. These requirements include:

- the Consumer Protection Code 2012;

- the Code of Conduct on Mortgage Arrears 2013;

- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Small and Medium-Sized Enterprises) Regulations 2015;

- the Minimum Competency Code 2017 and the Minimum Competency Regulations 2017;

- Part V of the Central Bank Act 1997; and

- Fitness and Probity Regulations and Standards issued under Part 3 of the Central Bank Reform Act 2010.

Provision 3.11 of the Central Bank’s Consumer Protection Code 2012 (“the Code”) requires that, where a regulated lender intends to transfer all or part of its ‘regulated activities’ to another regulated entity, it must provide advance notification to both the Central Bank and affected consumers.

Specifically, a lender must provide a consumer with at least 2 months’ notice before transferring all or part of its loan book covered by the Code to another person, including where the transferee is an unregulated entity. Where the transferee is an unregulated entity, the Code requires that the regulated lender also notify the consumer of the regulated entity that will be ‘servicing’ the loan for the unregulated entity.

In the event that there is a change in the credit servicing firm, the existing credit servicing firm must also notify the Central Bank and the consumer in advance, in accordance with the timelines set out under Provision 3.11 of the Code.

The Central Bank published Authorisation Requirements and Standards for Credit Servicing Firms on 10 December 2015. All firms seeking authorisation as a Credit Servicing Firm will be required to demonstrate to the Central Bank that they are in a position to meet each of the Authorisation Requirements and Standards.

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