I will not speculate or comment on the specific matter raised by the Deputy but I can outline the protections that apply when mortgages are transferred from a regulated entity.
The relevant Irish and EU consumer protections continue to apply to any mortgage that has transferred. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 provided that all the consumer protections a borrower had prior to a loan sale continue to apply after the loan sale irrespective of the regulatory status of the new creditor. This Act provided that entities which bought loans and which were not already subject to Central Bank authorisation and regulation must either become an authorised entity or else appoint a regulated credit servicing firm to deal with the consumer in relation to the loan. In either case, all the relevant Central Bank codes would continue to fully apply.
The Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 , which came into effect on 21 January 2019, expanded the activity of “credit servicing” to include legal ownership of legal title to credit granted under a credit agreement, and associated ownership activities. Therefore if a loan is now transferred, the holder of the legal title to the credit must be authorised by the Central Bank as a credit servicing firm unless it is already a regulated entity.
It should also be noted that all mortgage or other loans which are sold or assigned to a new creditor will continue to be subject to the terms of the contract as entered into by the borrower. As a matter of contractual law, the new creditor will not be able to unilaterally change the terms and conditions of the contract.
I am advised by the Central Bank that its regulatory framework makes clear that the relevant Central Bank statutory codes, such as the Consumer Protection Code and where applicable, the Code of Conduct on Mortgage Arrears , will apply to residential mortgages provided to consumers irrespective of the current creditor party to that mortgage agreement.
The Deputy should also be aware that the Central Bank wrote to banks, retail credit and credit servicing firms in August 2019 to set out its expectations of all firms in respect of loan sales. These expectations include that:
- Sufficient due diligence and information sharing takes place at the outset to ensure that complete customer files transfer as part of a loan sale.
- Where a cooperating borrower is complying with the terms of an ARA and their loan is sold, the new regulated entity cannot unilaterally change the ARA.
- The new regulated entity should continue to honour an ARA until review, expiry or by agreement, as appropriate. This includes honouring timelines and terms and conditions for reviews of the ARA.
- Where the borrower’s circumstances have changed, any change to the ARA must be appropriate, sustainable and proportionate to that borrower’s circumstances.