Dáil Éireann Debate, Tuesday - 21 March 2023
325. Deputy Paul Murphy asked the Minister for Finance if he agrees that it is a common strategy by Irish banks to assign their legal or equitable rights over debts and securities to so-called vulture funds; if he endorses this practice; his views on whether this practice is in the best interests of the Irish consumer; and if he will make a statement on the matter. [13133/23]
View answerLoan sales are a commercial decision for the Board of Directors of any bank. In my role as the Minister for Finance I do not have a role to play in making such commercial decisions.
The Central Bank has advised that it does not comment on the commercial decisions of banks. However, the Central Bank has also advised that its focus is on ensuring continued progress by the banks on sustainable distressed debt resolution, through the multiple tools available.
This includes restructuring activity undertaken by the banks via the proactive engagement (by banks) with distressed borrowers on the implementation of suitable alternative repayment arrangements. The Central Bank notes that it expects that this is the primary method by which banks resolve distressed debt, however, the Central Bank also notes that this is one of a number of distressed debt resolution tools including accounting write downs, mortgage to rent, engaging through the Insolvency Service, sales and securitisations and the legal process.
The distressed debt method selected by a bank is based on individual circumstances and implemented in the best interest of the customer. This can occasionally include the transfer of a customer to a non-bank entity that has the potential to provide a broader range of alternative repayment arrangement options.
It is important to note that where a loan is sold or transferred to another regulated entity, the protections that were available to borrowers prior to the transaction continue to be in place with the new owner. Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 if a loan is transferred or sold, the holder of the legal title to the credit must be authorised by the Central Bank and must comply with Irish financial services law that applies to ‘regulated financial service providers’.
This ensures that consumers whose loans are sold or transferred, maintain the same regulatory protections, including under the various Central Bank statutory Codes of Conduct, such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA).
