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Dáil Éireann díospóireacht -
Tuesday, 6 Mar 2018

Vol. 966 No. 3

Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2018: Second Stage [Private Members]

I move: "That the Bill be now read a Second Time."

I am pleased to move the Second Stage of the Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2018. For too long in this country, private equity or "vulture" funds have been literally above the law. They are unregulated, unaccountable and untouchable. They have no interest in the long-term health of the Irish economy or the well-being of our people. If enacted, this Bill will ensure that these vulture funds are regulated and can be held to account. Our statutory regulator, the Central Bank of Ireland, will be able to inspect them, investigate them and to impose sanctions on them, as required. Enacting this Bill is a vital and necessary step.

This issue is not just relevant for mortgage holders. It is equally relevant for farmers and small business owners who find their loans being sold on from under them. We all know the business model of these funds. They specialise in buying portfolios of distressed loans at a large discount. They squeeze the borrowers for everything they can and the ultimate objective is often to get their hands on the underlying asset, whether it is the family home, the buy-to-let property, the farm or business property. Their investment horizon is short-term. They have no interest in working their way through a distressed loan over a long period. In a game of pass the parcel between vulture funds, loans, including mortgages, can be sold on again and again with no limit. The 2015 Act is a half-baked measure that only regulates the intermediary, the credit servicing firm. This Private Members' Bill is not a silver bullet for people struggling with excessive debt but it is a crucial step in the right direction. Other measures are also needed. We have called for a review of the 2013 code of conduct of mortgage arrears and I am pleased that the Minister has agreed with this and initiated a process. There are those who believe that these vulture funds do not need to be regulated directly. We strongly disagree with this view.

I want to put some facts on the record about the current vacuum. Vulture funds are beyond the reach of the Central Bank. When the Government moved to regulate credit servicing firms in 2015, the Central Bank wanted the actual loan owners - the vulture funds - to be directly regulated. The Central Bank has no power to investigate or impose fines on any vulture fund. Vulture funds make all the key decisions regarding loans. They decide what interest rate to charge, whether to restructure a loan or renew an existing restructuring agreement, whether to enforce a loan or initiate legal proceedings. These decisions are merely communicated to the borrower by the middle man. The 2015 Act explicitly excludes these critical decisions from regulation. The Central Bank can take no action against the vulture fund that fails to honour the consumer protection code, the code of conduct for mortgage arrears or a code of conduct for business lending to SMEs. Vulture funds are not covered directly by the 2016 Central Bank SME lending regulations. Credit servicing firms only paid €35,000 in regulatory fees in 2017. Vulture funds paid nothing because they are not regulated. No information is currently available for the number of mortgage restructures entered into by vulture funds, as opposed to restructures which they have inherited. We do not know how many SME loans are owned by vulture funds and how many such SME loans are in arrears. There is no direct contact between the borrower and the fund that owns and controls their loan. The Central Bank has no enforcement power when a vulture fund miscalculates mortgage arrears, as has happened.

Permanent TSB should not be selling on loan portfolios to vulture funds. Permanent TSB and all the other banks should do what banks are meant to do: work through their loan books and make decisions on a case-by-case basis. This would involve restructuring loans, as a last resort, taking enforcement action, and writing off unrecoverable debt. That is precisely what they were recapitalised to do. It is not the case that the ECB supervisory board has instructed any Irish bank to sell loan portfolios. It is true that there is pressure to reduce the level of non-performing loans, but the chair of the ECB supervisory board has made it clear to me in writing that the ECB has not expressed a preference for some non-performing loan reduction tools rather than others.

We know from evidence given to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach last September that Permanent TSB has entered into almost 6,300 split mortgage arrangements with owner-occupiers. We do not know how many of these are part of the Project Glas portfolio the bank intends to sell, but it is reported to be several thousand. If a vulture fund buys these loans, it can quite literally terminate that split mortgage agreement at the stroke of a pen for any reason it thinks fit. It is indisputable that a vulture fund is much more likely to do this than a licensed credit institution. We must not throw these mortgage holders to the wolves in this manner.

I will give some examples of how these vulture funds treat their customers. Bank of Scotland Ireland restructured its operations in 2012 and as part of that restructuring it sold around 2,000 mortgages to Tanager DAC. Since then, many of the customers have been living a nightmare. In many cases of which I am aware, customers fell into arrears during the economic crisis but have been making full repayments on their mortgage, interest and capital, for several years now. They have pleaded with the fund to recapitalise the arrears but they have hit a brick wall. They have been told in writing that Tanager DAC does not offer capitalisation of arrears as an option. This is the plain vanilla of mortgage restructures and it does not offer it as a solution. It is in no way unique in that approach as a vulture fund. These are responsible mortgage holders, they have tried to engage with their loan owner, they are now making full repayments and have been for years. Tanager DAC has not attempted to engage or even negotiate with these customers. Lapithus DAC, the regulated credit servicing firm, is passing messages back and forward. There is no direct contact between the mortgage holders and Tanager. Tanager has no interest in entering into any restructuring arrangement. Its line is simple and it has communicated this through Lapithus to the mortgage holders that they must pay the balance on the loan or give Tanager the house. This is its attitude and it is a disgrace. The only protection these customers have received is from the courts. Despite the actions of the courts, Tanager has not changed its approach even when it was found that Tanager was miscalculating the amount by which people were in arrears. Its tactic is simple, which is to intimidate people into giving up their family home and to wear them out so much that they finally succumb and surrender, which many ordinary people will do because of the immense pressure they are under. All of this is being done by Tanager without any regulatory oversight from the Central Bank.

On SMEs, we know that both performing and non-performing loans have been sold to unregulated loan owners. Business expansions have been halted by the loan owner despite the fact that the company has never breached its loan agreement. We have come across the so-called loan to own strategy whereby a vulture fund simply wants the underlying assets of the company and will do anything to engineer a technical default to allow it to enforce the loan agreement. I am aware of these cases. Companies have complained about instances where vulture funds have bought loans in an industry where they already own or manage competitors in the same industry. They play one off against the other. This results in a clear conflict of interest and we know of cases where the vulture fund has acted on the loan to benefit a competitor. Many of the leading legal firms also have non-compete clauses with many of the vulture funds. This restricts companies from taking legal action against vulture funds.

There is one extraordinary story I must bring to the attention of the House. I have seen the original paperwork and can stand over the facts of this case. In May 2014, an individual was contacted by Pepper Asset Finance on behalf of Stapleford Finance DAC, a unit of the US investment giant CarVal.

The individual was informed that Stapleford Finance DAC had purchased his loan of €1.6 million from the IBRC special liquidators. This individual had no loans with IBRC and he certainly did not owe €1.6 million. This was a case of mistaken identity. Pepper Asset Finance was informed of this fact but the individual was still pursued repeatedly. The letters kept coming and he was threatened with legal action by solicitors acting on behalf of Stapleford Finance DAC. This man had to engage his own solicitors to fight the onslaught. It cost him and his family immeasurable stress and worry. In November 2015, following a freedom of information request, the IBRC special liquidators confirmed in writing to this gentleman that he never had a loan with it, or with the old Anglo Irish Bank. This confirmation was sent to the funds' solicitors and in December 2015 the funds' solicitors paid the individual just over €2,400. Of this, €1,500 was a gesture of compensation and €900 was towards his legal costs. The man asked that his records be deleted from its system. Stressed by the experience the individual agreed to settle in order to move on. To him the case was closed. In January 2017, extraordinarily, he received another letter demanding, again, payment of the €1.6 million. More letters followed. The last letter was received in October 2017. The individual wrote back enclosing confirmation of the fund's error, which the company had sent him through its solicitor, and he demanded that his details be deleted and its record corrected. He has not heard anything back since then. Almost four years on and he is still being pursued for a debt that is not his. The nightmare is continuing. I will conclude with the words of this individual, sent by him to me in an email:

I am around in business a long number of years but never have I seen arrogance, thuggery and bullish attitude as I have had with this - ruthless cowboys out to get money from anyone who will part with it. I think this demonstrates the reason as to why they have to be brought in line.

I believe we have a duty to act.

I welcome the opportunity to speak on the Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2018. I thank my colleague, Deputy Michael McGrath, for all the work he has done in bringing this Bill to Second Stage today. This Bill aims to protect homeowners with mortgages, farmers and small businesses from vulture funds. It is necessary because the 2015 Act specifically did not do so. That Act, brought through the Oireachtas by Fine Gael at the time, specifically excluded from regulation the vulture fund owners of the loans. All the Minister has to do is check the Official Report during the passage of that legislation to see that I called for these funds, as the owners of the loans, to be regulated. I warned what would happen if Fine Gael carried through its approach of only regulating the middleman or the agent. That is what happened. The Government had the numbers to do that in 2015. This is why Fine Gael is here today. It does not control the Dáil and for once the Dáil will be able to get legislation through, and not the legislation that was bullied through by the Minister's predecessors. At that time the Fine Gael response was to merely look after the vulture funds. This does not protect the homeowners who have been making an honest effort to deal with their loans.

Currently AIB is considering selling off €4 billion worth of loans and Permanent TSB is considering selling off another €4 billion worth of loans. This is a total of €8 billion. The State owns 71% of AIB and 75% of Permanent TSB. Up to 20,000 home mortgages are involved in this situation, at an average of €200,000 for each family home. Vulture funds will not come into this sale unless they are guaranteed a minimum profit of 20% from the €8 billion. This is €1.6 billion. The funds want to take €1.6 billion of profits out of the banking network in Ireland. This will be a loss to the Irish taxpayers' investment in those banks.

Bank of Ireland, on the other hand, is not controlled by the State which only owns 14%. Bank of Ireland is not proposing to sell any of its loans to vulture funds, nor is it proposing to buy any of these loans that may come on the market. The only banks selling are the State banks controlled by the Minister that are too lazy to do the job they are employed to do; collect the money and deal with their borrowers. They would prefer to lose €1.6 billion of taxpayers' money and put homes and homeowners at risk. Houses owned by these banks have been vacant around the State for five, six and seven years and the banks are doing nothing about it.

This is a policy issue for the Minister and not for the board of directors or the chief executive of the banks. It is the Minister's decision and he has a duty to protect the taxpayers' investment in the banks, a duty to not let the banks flitter away €1.6 billion and a duty to protect the borrowers. The Minister cannot blame the EU, the ECB or the banks. The Minister controls them and the State owns them. The Minister is not a disinterested shareholder. The Minister should make the banks do their job and make them collect the money that they want to pass over to the vulture funds. It is a matter of public policy. A decision to sell these loans is the Minister's decision and the only person who can stop the sale is the Minister as he is the controlling shareholder.

This Parliament now stands as the last line of defence for people who are threatened by purchase of their loans from the banks by vulture funds. Permanent TSB has defied the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and this House by not turning up to the committee. If the State banks do not turn up for a hearing with the finance committee what chance have we with the banks that are not owned by the State and what chance have we with regard to the vulture funds? This question is bigger than vulture funds. It is about what type of society we want and what type of banking system we want. I suggest that the citizen has had enough. No civilised society can tolerate the actions of vulture funds. They are here to profiteer on the backs of the ordinary people we represent in this House. These funds are adding further hardship to the cases of families, small businesses and the farming community. We cannot stand idly by and watch what these funds are doing. Their culture is not to engage. They refuse to do it. They leave the customer on the long finger and act through an agent. The agent is not accountable to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. The agent is only accountable to the vulture fund. I am aware of a recent case that was being settled. The final straw was that the client had to promise to cash in his sister's pension fund in order to pay in five years' time. These funds are absolute bullies and thugs. The culture they create for the next generation of bankers should not be tolerated by any country.

I fully agree with the Bill but I believe we will shortly find ourselves moving beyond it. That is why the Master of the High Court, Mr. Edmund Honohan, SC, has put a Bill before the Members of this House for their consideration, namely, the national housing co-operative and fair mortgage Bill 2018. There is now an onus on the Government to look at what Bills are before the House, to consider what is being said by Deputy Michael McGrath, by Sinn Féin and by other parties and to take the best from all the Bills in order to offer a protection of the citizens we represent.

Do we really want the banks to make more than €1 billion each year and at the same time terrorise their own customers? I believe the answer is "No, we do not." We must find some way to ensure that, in spite of the current arrangements, they pay their fair share of tax into the coffers of the State. This is not happening now. They are disregarding us, they are setting their own rules, they are profiteering and we allow them away with it. I appeal to the Minister to take the best of this Bill to do whatever he can to put in place a system of protection for the vulnerable people in the State who look to us as parliamentarians for help.

There are many reasons not to accept this Bill but I very much hope the Minister will look for the reasons and the positives to ensure he accepts it. For too long we have been focused on the bottom line of the banks and the systemic nature of the banks while ignoring the systemic nature of people. It is about the human cost to families and not just the bottom line. Some Government some time is going to have to embrace that. I very much hope it is the Minister. There are no excuses for failure in this regard anymore. In the past there may have been reasons but there are no longer any excuses.

I commend my colleague, Deputy Michael McGrath, on bringing forward the Bill. The Minister needs to go forward and tell the Central Bank while it is doing the review that he equally needs to put the code of conduct on mortgage arrears on a statutory footing. The reality is that the only thing that is legally binding is the moratorium - nothing else - so banks can, following the 2013 amendment to the code of conduct on mortgage arrears, cherry-pick what they want and tell customers they will do a deal for them and tell them to pay their mortgages off in the next ten years, six months or whatever suits them. They will have offered the customers something, they will claim. They will have theoretically complied with the code of conduct on mortgage arrears and then they will throw the customers under a bus anyway. This is what is really going on. Therefore, at some stage the Minister will have to put the code on a statutory footing. I ask him to check the Supreme Court overturning a High Court ruling on this to show that a moratorium is the only thing that is legally binding. This must be done.

Other Bills have passed through the House. The Mortgage Arrears Resolution (Family Home) Bill introduced by Deputy Michael McGrath in 2017 also passed Second Stage. This Bill would remove the banks' veto, putting the people central, but no, what have we done? We have done something very dishonest that subverts the spirit of democracy, with the Taoiseach taking refuge in Article 17.2 of the Constitution and not issuing money messages. A hundred Bills passed Second Stage in both Houses over the course of last year. Five were enacted and 41 sit on Committee Stage, 27 of which are being systematically blocked by the Minister's Government by its not issuing a money message. There is nothing in the Constitution to stop the Bill continuing to Committee, Report and Final Stages. I urge the Minister to tell us what the cost is and to let the House debate the matter but I ask him not to continue in a dictatorial fashion to block tangible measures to protect mortgage holders by invoking Article 17.2 of the Constitution.

I thank Deputy McGrath for the work he has put into preparing the Bill. Before I get into the details of the Bill I wish to give what is a hugely important issue some further context if time allows me to do so. I wish to do so by acknowledging why people have fears about this matter. I recognise their concerns and I am acting in the best way possible that I can to respond to the concerns people may have about changes that could take place in our banking system in the future. I reiterate that one of my key priorities as Minister for Finance is to normalise our banking system over time, to ensure that our banks are able to invest in households and businesses and to provide the credit and lending that is needed while at the same time putting in place the most appropriate and effective framework of consumer protection. This includes ensuring there is an appropriate framework in place for the resolution of complaints. What I want to do, and it is one of the reasons I have asked the Central Bank to conduct a review of the code of conduct on mortgage arrears, is to ensure we have the fairest and most effective support for any borrower who faces great difficulty. Alongside this, we must be careful that actions we take to offer further protection as and when loans are sold or changed do not have unintended and very negative consequences for either the banks themselves, in which we have a stake, their relationship with the regulator or, crucially for me, all the citizens who depend on a functioning banking system in their day-to-day lives.

I fully recognise the position in which families find themselves when they have arrears, facing firms with which they are not familiar, firms about which they may have concerns. All of this will make people even more concerned about what the future will hold, and I want to put these fears in context. The most recent Central Bank figures show that the number of mortgage accounts for principal dwelling homes, PDHs, in arrears fell further in the third quarter of 2017. This is the 17th consecutive quarter of decline. The number of PDH mortgages that were classified as restructured at the end of September was 119,070. Of these restructured accounts, 87% were deemed to be meeting the terms of their current arrangement, up slightly from the previous quarter. Thankfully, repossession numbers in Ireland remain low in comparison with other countries and repossessions in Ireland take longer. It is important to drill down into the repossession figures in the context of this debate and to refer to the Central Bank's figures which again emphasise the difficulty people experience when facing this final phase of dealing with debt. In 2016, the number of PDH properties repossessed was 1,693. This was made up of 1,452 repossessions by banks and 241 by non-banks. In 2017 up to the end of September, the total number of PDH properties repossessed was 1,106,982 by banks and 124 by non-banks. Much of this is due to the fact that the Government has reformed personal insolvency legislation, changed the relationships in respect of insolvency arrangements and put in place the Abhaile service to help borrowers in arrears, putting a particular focus on those who are in long-term arrears to ensure there is dedicated support for them as they work through these very difficult issues in court. More than 10,000 vouchers have now been issued for the Abhaile scheme since it began in July 2016.

To put this in further context, there have been broader changes in our banking system. Non-performing loans in the banks are now down by 60% to €22 billion from a peak of €54 billion. They are considerably higher than is acceptable in the long run, and this is the view of the single supervisory mechanism. However, even leaving this aside, to have a banking system with this level of non-performing loans causes challenges for those banks and in turn for our own economy.

We have legislation in place to protect mortgage holders, which I have detailed. We put in place the 2015 Act. We have the code of conduct on mortgage arrears, to which I have referred, and which has played a valuable role in alleviating the acute difficulty that so many faced during the crisis. As I have indicated publicly already, I have asked the Central Bank to review this existing code and to report back as soon as is practically possible with its assessment of the implementation of the code.

We have already touched on the status of Permanent TSB. The bank is required to put in place a significant reduction in its non-performing loan ratio, which as it stands is over five times the eurozone average. The relationship that exists between me and the bank is not, as Deputy Fleming has stated, one of control. The loan sales that have taken place in the past and that are under debate this evening do not require my consent as Minister for Finance. The framework in place is a legally binding contract which cannot be changed unilaterally and it was required to be put in place during the depth of our crisis. It is true that I will be consulted on that loanbook sale when it reaches a certain point in the process, and that has not yet occurred.

As I have indicated, the Government has agreed to support the Bill. There are drafting issues on which we will work with Deputy McGrath. We have already begun a period of consultation with the Central Bank which is at an initial stage. It has raised a number of impacts and issues within the Bill that we will have to consider at drafting stage. A further matter that will require consideration by a committee of the House is whether the Bill will require consultation with the European Central Bank. Some of the matters on which I will work with the House refer to what is the definition of a "credit agreement owner" and the potential consequence of this for excluding any form of securitisation. We may need to work on this matter as the Bill is formulated to permit such vehicles as they are currently formulated but to avoid creating an opportunity for more active loan-owner purchasers to structure themselves in a way that would fall outside the scope of the Bill.

This is not just a theoretical matter, it is a very important one.

I also have some concerns about how we will square the practicalities of regulating loan owners with commitments on the free movement of capital in the EU and EU competition law, and these are matters that will require further exploration.

There are other technical matters in the Bill that will require drafting and work and I hope many of these can be resolved quickly and without any difficulty. I take this opportunity to make my Department and officials available to provide any drafting support we can in advance of the consideration of the Bill at pre-legislative committee. We may be able to progress the Bill quicker this way than by the line-by-line amendment process which takes place later on Committee Stage. I will work with the Dáil and committee on this matter.

I have already made clear that I have met a number of the main banks as part of my normal engagement process. I made clear to them that they need to be very cognisant of customers' concerns in relation to their actions.

The framework the previous Government put in place played a very valuable role in alleviating many of the darkest difficulties that many feared would develop then. The framework in place is one that has played an effective role. I recognise strongly the concerns and fears that have been ignited by a decision taken by a bank that is independently regulated, with which I have a very strictly governed legal relationship. Given that I recognise the issues at stake I will accept the Bill on behalf of the Government, work on it through pre-legislative scrutiny and on Committee Stage to deal with the technical issues which I think we can deal with quickly and the more substantial issues that will require work. In parallel with this, we will ask the Central Bank to continue its work in reviewing the code of conduct on mortgage arrears to ensure that if the overall framework can be strengthened in a way to maintain the balance we find a way to do so.

Go raibh maith agat, a Leas-Cheann Comhairle. Tá áthas orm a bheith ag caint ar an reachtaíocht seo. Cuirim fáilte roimh an reachtaíocht atá curtha os comhair an Tí ag an Teachta Michael McGrath. I welcome the Bill and I commit that my party will work the Minister and Deputy Michael McGrath on Committee Stage to ensure it sees its way into law. My party fully supports the Bill and hopes it can progress as quickly as possible. It adds some amount of reassurance to homeowners with regard to who is eventually regulated, and it closes the gap in terms of the regulatory framework.

We all know, and it has been articulated by previous speakers, that vultures are scavengers and need something to scavenge on. What attracted them here was the carcass of an economy that was ruined by a previous Government under Fianna Fáil and the light touch regulation we had at that time. We must remember this and learn from it, but we also need to accept the Bill on its merits. The Bill is one that I have no problem supporting.

I recall standing with the IBRC mortgage holders outside the gates of Leinster House just over four years ago as they found themselves in the clutches of the vultures. They grouped together and demanded action from the Government. Along with others, I supported their campaign and at that time we forced the previous Government, comprising Fine Gael and the Labour Party, to act. What we got was a draft Bill that proposed to regulate the vultures, the owners of the debt, but then there were dramatic changes as a result of lobbying by the same vultures, and instead of regulating the owner of the debt what the Government proposed was to regulate the credit servicing firms, the middlemen, and that was a huge mistake.

Tonight, the Minister gave me a reply to a parliamentary question in which he informed me that ten of those middlemen, or so-called credit servicing firms, that were operating at the time did not actually go through with their applications. They withdrew their applications for regulation. Two of them still operate under the transitional regime, which, in 2015, stated that when the legislation was passed they would be deemed to be regulated until they were authorised after an application to the Central Bank. Three years later, two of them are still unauthorised but are operational in the State and ten of them have been authorised.

We proposed an amendment to the legislation in 2015. During its passage we called for full regulation of the owners of the debt. We wanted the Government to go back to the original purpose of the legislation and not the half measure we were dealing with then. Some of the IBRC mortgage holders were in the room, and they were let down by the Labour Party and Fine Gael, and by Fianna Fáil which did not turn up to vote on the amendment at the time. The Minister knows that in 2017 I tabled a Bill on this issue that would close the regulatory gap. It was in for the lottery. I welcome the Bill that is before us tonight. It is a progressive step forward. I am glad all sides of the House now support what Sinn Féin argued for in 2015.

Let me be clear about this, and I recall introducing the legislation in 2017, this is not the solution in its entirety and if we were to have an honest debate here, everybody knows this. This regulation of the vultures would mean that if they step out of line the Central Bank can prosecute them and hold them to account, as opposed to going after the middleman. The Central Bank has no reach at this point in time to the vultures unless they break the rules or step over the line.

What the Bill does not do, and this is what we need to talk about, is protect homeowners. I am very concerned that the country is being sold a pup. An impression is being given that because of this legislation, which is important legislation that brings us a step forward, somehow these homeowners will be protected. They will not be protected and this message needs to go out loud and clear. It does not give them any additional protection under the code of conduct on mortgage arrears. It gives them no additional protection under the consumer protection code. It gives them no additional protection - none whatsoever - from the vultures repossessing their homes. It does something different, and that something different is very welcome, but the core issue here is, as has been mentioned, Permanent TSB, which is a State-owned bank, is about to embark on selling 18,000 loans, 14,000 of which are family homes and 4,000 of which have tenants in them.

The problem at its core is that vultures have only a short-term interest. When the legislation is passed it will not make a difference to the homeowner. There is no additional requirement on the vultures. There is no requirement on them to offer any of the options of the code of conduct on mortgage arrears because that code is entirely voluntary with regard to the suite of options. As was mentioned earlier, vultures do not do split mortgages or capital arrears. They do not do the measures taken in 80% of the 120,000 restructures that have happened in the State. If we allow this sale to go through we will throw those families to the vultures. Regulated or not, it makes no difference. The Bill does what it says on the tin. It basically states if the vultures step over the line and do not comply with the code of conduct the Central Bank can prosecute them, but it does not provide any protection. This is why I plead with Fianna Fáil to use the weight it has in supporting the Government to ensure the sale does not go through.

Permanent TSB has done shoddy job at dealing with its loan book. We should not facilitate it, and when I say "we" I really mean the Minister. He can hide behind the arrangement that is there, that technically he does not have to give consent, but he has to be consulted. He is the Minister that holds 75% of the shares in this bank and he needs to stand up and say the Government does not support the notion of our citizens' loans being sold to vultures, regulated or not, because we know the vultures have a short-term interest and we recognise the citizens' loans are a long-term product. They simply do not merge. It does not work. Unfortunately, the Bill provides cover to banks, which now think somehow it is okay to sell loans to vultures simply because they are regulated.

It is not the regulation that is the issue, but the fact the code of conduct on mortgage arrears and the options thereunder are not mandatory. There is no requirement on the vultures to offer any of those solutions - none whatsoever. That is the problem. I welcome the review of the code of conduct on mortgage arrears, and I put out a public statement to that effect, but the last time that was reviewed, a repossession agenda was pursued. The review gave additional powers to the banks and reduced the powers of the consumer. Let me make it clear. I call on the Minister to stand up and make it clear that he will not support Permanent TSB selling loans to vultures, regulated or not, because we know how it ends up. Moreover, I call on him to appeal to Ulster Bank to follow suit.

From some of the contributions in this Chamber today, one could be forgiven for thinking that the State is a republic of the people for the banks by their friends in Fianna Fáil and Fine Gael. At every single juncture in the last 20 years when the interests of the people and the banks came into conflict, the establishment sided with the banks. First, Fianna Fáil facilitated light-touch regulation to allow the banks to make super-normal profits. Then it facilitated a property and credit boom that benefitted the banks at the cost of the owners. When the crash happened, it saved the banks at the expense of generations of Irish citizens, saddling them with tens of thousands of euro in debt. In the shadow of the crash, Fine Gael created a pillar banking system to reduce competition and to allow those banks to once again make super-normal profits. On this occasion however, those profits were to be made free of corporation tax.

The Government stood by while tens of billions of euro in bank loans were sold to the vulture funds, and tax breaks were designed to facilitate those funds. When the Government was forced to tighten those tax regimes, Fine Gael plastered that legislation with loopholes and exemptions. Of course, the Government also stood idly by in recent times while those banks were stealing money from people through the tracker scandal.

For me, one of the most sickening aspects of the policy that this Government has pursued - a policy I also raised with the previous Minister for Finance - is that it allows for banks to sell mortgages and business debt at cut-price levels to vulture funds, but refuses to allow those homeowners and those businesses to buy those loans at the same rate. That policy is grossly unfair, and it is putting people out of houses and out of jobs.

Today I spoke to a young woman who is one of thousands of victims of the policy of the Minister's Government. Like many women in mortgage distress, she falls under the really strange term that is now used, namely, "a deserted mortgage holder". Her partner has left her to deal with the cost of a mortgage. She has a young daughter, and she has been faithfully covering the mortgage of €1,500 a month since the crisis happened in her life. That has had a massive cost to her with regard to heating, food and every other priority a family should have. She is a nurse, and works all the hours she is given. In the Government's voluntary resolution scheme, the bailed-out bank refused any of the reasonable offers that the woman made. The only offer she has been given so far is that it would extend the term of her loan. That means that the bank would make thousands of euro in extra interest and profit out of her distress. That bank is making billions of euro in profit at the moment and has been bailed out. The worry I have is that the regulation that is being offered here today will not protect her or families like her in the future.

I will start by thanking Deputy Michael McGrath for bringing this Bill, which I hope passes, forward. The Government has said it would not oppose it anyway. The Minister is probably aware, and I hope he is, of the distress caused by continuous announcements by various banks that they are selling parts of their mortgage portfolios to the vulture funds. That is causing huge stress to homeowners, who for a variety of reasons, find themselves in mortgage distress. We do not need to be here. People should not be going through this. The Minister and previous Governments have failed to act decisively on this issue.

In 2015, Fine Gael and the Labour Party failed to put the proper regulation of vultures in place. Their legislation only regulated the middleman. In 2016, as part of an all-party Dáil Committee on Housing and Homelessness, Sinn Féin proposed a number of solutions that could have been enacted quickly to help those in mortgage distress. The Government ignored many of these. The Government failed to legislate to cap mortgage interest rates, legislation that could be designed to lapse at some point in the future if a healthy market emerges. The Government also failed to amend the personal insolvency system to end the banks' veto in cases where the family home is involved, regardless of when the arrears began. It failed to significantly improve the mortgage-to-rent scheme to make it a more attractive option for both lenders and housing bodies, and failed to apply greater pressure on the banks to meet ambitious targets. Any mortgage-to-rent scheme must be accessible and designed to help struggling homeowners. These proposals were also not accepted. Sinn Féin attempted to make sure that the owner, that is, the vulture, would be fully regulated, but our amendment was voted down at committee in May 2015 by Fine Gael and the Labour Party, with Fianna Fáil not present for the vote.

In 2017, Sinn Féin tabled legislation, the Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2017. It is now desperately needed to protect the homeowners affected by sales to vultures by fully regulating the actual owner of the credit. The Central Bank has called for this course of action. Obviously, Sinn Féin's ideas will only be accepted as a last resort by this Government, which thinks it has all the answers. However, the most recent homelessness figures clearly demonstrate that the Rebuilding Ireland programme is not working. The Government's housing policies are failing.

Sinn Féin supports this Bill as it is similar to one Deputy Pearse Doherty has tabled and to our amendments when the original Bill was before the Oireachtas. However, regulation by itself will be of limited benefit to homeowners. Vultures operate on a short-term basis, while mortgages are long-term products. The Minister recently announced a review of the code of conduct on mortgage arrears. Our demand is that restructuring options in the code, such as split mortgages and mortgages-to-rent, should be made mandatory and not just voluntary. This would mean that the bank or vulture, when regulated, would have to offer one or both of these measures before any repossessions. This would be a solution. Will the Minister do this? I call on him to stop prevaricating and take action. Deputy McGuinness spoke the truth when he said that vulture funds are bullies and thugs. That is the experience I have had when speaking to families in my constituency office who have been dealing with them.

The Labour Party will also be supporting the Fianna Fáil Bill tonight. The effect of the Bill is to regulate so-called vulture funds that purchase non-performing loans from Irish banks. The Bill, if passed, would ensure that the Central Bank has the power to directly regulate the owners of the loans, while currently only those who deal with the borrowers directly are regulated. However, it is true that it is the owner, in all likelihood the vulture fund, that will make the key decisions around the future of the loan.

The latest controversy arises from the decision of Permanent TSB to sell off thousands of loans, worth up to €4 billion. This sale is likely to be followed by others, including Ulster Bank and AIB. The sale arises from the failure of the bank to manage its loan book properly.

Many people will have read a very good article in today's Irish Examiner by Ms Julie Sadlier, who has been advising people threatened with repossession and attending repossession courts since 2008. She has written a very detailed examination from her own experience on this issue. She outlines that since the Personal Insolvency Act 2012, around 2,000 personal insolvency arrangements and around 1,500 bankruptcies have been approved. The number of home loans that have been restructured is appallingly low. That failure has compounded the problem. The lack of consistency in how borrowers are treated is also deeply disturbing.

As has already been said, at the heart of this problem is the motives of the banks. All they seem to care about is restoring their balance sheets by selling off loans rather than writing down debt and working with their customers to find and agree on sustainable solutions. Some 75% of Permanent TSB is owned by the State. It is a bank that has received significant support from the people of Ireland in recent years. However, instead of doing the hard work itself, it now plans to outsource the difficult job of fixing its balance sheet by selling off "non-performing loans", as its representatives call them. Permanent TSB has also failed to provide any clear information on the make-up or type of loans it plans to sell.

The Government has handled this controversy badly. The Cabinet waves through the news from the Minister of the latest planned transaction by Permanent TSB. As Minister for Finance and principal shareholder, it is incumbent on him to seek protection for citizens whose mortgages may be sold on to vulture funds.

In his speech, the Minister talked about "normalising" and the need for the banks to "normalise". I question this term. Surely it cannot be normal to allow the sale of mortgages where people have entered voluntarily into agreements and split mortgages and are paying whatever they can, yet part of this normalisation involves including the loans of such people in the sale. I question that this is "normalising".

Compelling PTSB to provide more information on the loans it plans to sell would be a good first step. The proposal to hand over large numbers of troubled mortgages to unregulated vulture funds seems perverse. It will add further precariousness to the housing market and the homelessness situation because these people have to live somewhere. It is wrong that the sale would include those borrowers who have engaged with the banks and made the effort to pay their debts, and agreed to a restructuring or a split loan product. This legislation, as Deputy McGrath has acknowledged, will only go so far towards addressing the problem. The reality is that regulation is not the main issue, although it is a step in the right direction.

Based on ECB Single Supervisory Mechanism rules, 28% of the loan book of PTSB is classed as non-performing. However, of the approximately 20,000 loans that PTSB expects to sell, 6,500 appear to be active split mortgage loans. Those split loans are classed under these rules as non-performing. Splitting mortgages was one of the key responses to the arrears crisis and it was promoted by the Government and urged on the banks. It was one of the arrangements that were promoted, yet now the loans are being sold off to these vulture funds. These are homeowners who have engaged with the banks and who have been paying what they can afford. A portion of the loan was warehoused while repayments continue to pay down the capital sum on the rest. It is a betrayal of those homeowners who engaged to the best of their ability with the banks to allow these loans now to be sold off to a vulture fund.

It is hard to have sympathy for those with capacity who have stopped paying their loans completely, but the evidence would suggest that a very large number of people did engage and did pay what they could. However, the other solutions do not appear to be working. Mortgage-to-rent has not delivered enough, although it is a good concept. The main reason for this is that the banks have not actually engaged with it. I am dealing with one case of a person who agreed the very early stages of mortgage-to-rent. The Clúid Housing Association agreed to work with her and her lender apparently agreed, but four years later it still has not signed off on this and it still has not gone through. There is a reluctance on the part of the banks and they are not co-operating, certainly in my experience of this one case, with the mortgage-to-rent scheme.

For those mortgage holders have engaged with their lenders, their loans should not be sold off because of a quirk of the rules. This issue is being examined, but when Deputy Howlin raised this with the Taoiseach over a week ago, the Taoiseach implied that the Labour Party was seeking a loosening of regulations on the banks. However, the Department of Finance has also been seeking a change to the rules that treat those split mortgages as non-performing loans. I hope the change will be made and the Minister should continue to pursue that.

From the height of the arrears crisis, major progress has been made, as the Minister acknowledged, to help those mortgage holders who found themselves out of a job or unable to meet their repayments. From the code of conduct on mortgage arrears to the mortgage arrears resolution process, those policy initiatives have provided some protection to borrowers. The changes in the bankruptcy law pioneered by my colleague, Deputy Willie Penrose, have also made it easier for those with unrealistic debts to seek relief within a year. The additional resources provided to MABS by the then Minister, Deputy Burton, and the establishment of the Abhaile service have ensured support for those families who found themselves dealing with legal letters and the courts. The introduction of court mentors and a dedicated mortgage arrears service have been central to that. Much has been done. However, for those who have engaged and who have done their bit to meet their obligations, it is essential that their split performing loans are not sold on. It is incumbent on the Government to ensure that does not happen. It is about time Irish banks resolved their problems in-house rather than trying to outsource a solution to vulture funds. That means writing down debts and compelling banks to use the mortgage-to-rent scheme as it was designed.

In the time I have left, I want to quote from Julie Sadlier's article in the Irish Examiner today. She states:

So what next? We need to acknowledge that the income and repayment capacity for the vast majority of the tens of thousands still in arrears has never been, and is unlikely to ever be, replaced because of the damage caused to their sectors by the recession.

They are also the cohort being accused of strategic defaulting but from what I see default is not, and never has been, part of their strategy.

Bank claims of strategic default are false, just like their claims that for many years there was no tracker overcharging. This is simply propaganda to alter public perception and influence government policy.

These borrowers do not, however, fit into bank or personal insolvency resolution criteria and so they are facing certain repossession and homelessness unless Government intervenes.

This is from a very experienced practitioner who has been working directly with families in this situation.

We will be supporting Deputy McGrath's Bill but, as has been acknowledged on all sides, a lot more needs to be done to protect, in particular, those people who have engaged with their banks and who are now basically being thrown to the wolves.

A Residential Tenancies Board adjudicator will hear a case tomorrow which will show what vulture funds are all about. The case will be heard in Cork city and concerns the city's Leeside apartments complex. The apartments were bought by a vulture fund, Lewis Capital, late last year. Its plan is to evict using major refurbishment as the weapon of choice, to raise rents and to get new tenants in to pay those rents. More than 25 households, many of them young families with children, have been issued with notices to quit at a time when the homelessness levels in the State have surged over the 9,000 mark and are at all-time record high levels. Tomorrow's case is the first challenge at the Residential Tenancies Board to these eviction notices. As soon as a result is known, I will communicate it via social media. The very fact that the point at issue is the eviction of men, women and children for sheer profit is a sign of what we are dealing with when we discuss vulture funds.

The Bill is proposing the regulation of the vulture funds. This is not controversial and I think there will be unanimous support for it in the House. We will support it on these benches. However, for us, regulation does not go nearly far enough. A regulated vulture is still a vulture. The vulture funds, as was mentioned, are not included in the code of conduct on mortgage arrears. PTSB has 18,000 loans that it is putting up for sale and Ulster Bank has 7,000, making 25,000 in total, with other banks still to come. Some 4,000 of the PTSB loans are buy-to-lets. This is an example of what might happen if the vultures get their claws into these houses and these people's lives. Where vultures buy these loans and make settlements with the landlords, whether it is the landlord paying their price or selling at another price, those residents will inevitably be faced with rent hikes. I am sure quite a few of them will be faced with rent hikes that go well beyond the rent pressure zone limits, with the example of major refurbishments coming into play once again. This again shows the importance of the hearing tomorrow.

Many will face eviction if they are unable to pay the rent increases. In such a situation tenants have a possible remedy in applying political pressure when the mortgages are effectively owned by the State., but it is a far less attractive proposition to try to exert political pressure when the mortgages are owned by a vulture fund. On no condition should the loans be sold to vulture funds. They should not be allowed to get their claws on people's homes and lives. If emergency legislation is required to exclude the possibility of a sale to vulture funds, it should be passed by the House.

To deal with the distressed mortgages underlying this problem in a proper and humane way, it is necessary to have a banking system which provides for the interests of ordinary people, not one which provides for the interests of the markets. For us, that means opposing bank privatisation and supporting a genuine State banking system with boards that serve the people rather than the markets. If such measures were in place, several creative options could come into play: the retrospective revaluation of houses to pre-Celtic tiger price rates, allowing for inflation in the period since; the scheduling of affordable mortgage repayments for those who are able to meet them and the provision of a mortgage-to-rent scheme for those who are not in a position to repay their mortgages, a measure which would increase by thousands the local authority housing stock. When we talk about vulture funds, we talk about capitalism "red in tooth and claw". For ordinary working class people faced with an enemy - vulture funds are the enemy of working people - "red in tooth and claw", it is necessary to push for legislative change, but one also has to be prepared to organise and fight, to use people power to resist evictions on a large scale.

If the Leeside residents win tomorrow before the Residential Tenancies Board, it will be merely a victory in the first round of the fight. They will have knocked back the vulture fund on the issue of notices to quit, but they will still face the threat of eviction by way of rent increases. If they do not win or further attempts are made to evict them, they will have little option but to fight. Where are the affordable rental properties in the cities of Cork, Dublin, Limerick or anywhere else? They will have little option but to stay and I encourage them to do so, to refuse to leave and organise solidarity among their fellow residents and hundreds of supporters in the city to resist evictions, the vulture funds and the agenda of the blood sucking greedy capitalism that so many residents and homeowners are facing.

I support the Bill which has been tabled by Fianna Fáil, not because it is a solution to potential repossessions but because all creditors, including vulture funds, should be brought under the Central Bank's regulations and code of conduct. On the tracker mortgage issue, the Central Bank was able to hold the banks to account. It was difficult and it had to bring them in kicking and screaming, but at least it was able to do so. The Bill will make no difference in dealing with mortgage arrears or possible repossessions. The Central Bank's code of conduct is a code to regulate behaviour such as the contact a bank can make, etc. There is, however, no regulation of terms or solutions.

I know a family in Drimnagh who engaged with a lender and applied for a mortgage-to-rent but the bank refused. The Irish Mortgage Holders Organisation took it to court as a test case to clarify whether there was an obligation on a bank to accept a mortgage-to-rent. The court ruled that there was no such obligation and granted the repossession. Under current rules, banks do not have to accept the solution put forward.

This legislation should be brought forward, but there must be further regulation or, as the programme for Government states, the code of conduct should be put on a statutory basis such that banks would have to accept a mortgage-to-rent or a split mortgage, etc. I am deeply concerned that there is a mixed message and that people might think they will be protected by the Bill. They will not. We in this House must ensure people are protected. Permanent TSB should be told not to sell the mortgages.

The role of vulture funds in Ireland expanded dramatically when Fine Gael and the Labour Party came to power. The same is true now that Fine Gael and the Independents are in power. They have become a terrifying new breed of landlord thanks to a Government the policies of which lured them here in the first place. Their existence is a symptom of a complacent Government prioritising private sector interests over those of ordinary people. Vulnerable homeowners have become fodder for vulture funds. They are not only struggling to pay off mortgage debt, but they could also face homelessness if the State fails to intervene in the selling off of PTSB loans. While sales such as this are not new, the level of sales sets a new precedent for the behaviour of vulture funds, banks and the Government. Since Fine Gael came to power, Ulster Bank has done the same. In 2014 the former Irish Nationwide Building Society which was under State control offloaded 13,000 home loans to vulture funds. It is important to acknowledge that while the Bill seeks greater regulation of the powers of vulture funds, not just of the funds, it will not be passed in time to prevent the sale of the PTSB loans.

We cannot be naïve about this. We all know how long it takes for even Government Bills to get through the House these days, let alone Private Members' Bills. Therefore, the Government needs to intervene now. Arguments suggesting it could not possibly intervene in the market are nonsense because it has been done before. Need we remind the Minister of the unprecedented level of intervention by the State as part of the bailout? It also seems to have been forgotten that we now own the majority of the banks. The State owns 75% of PTSB. In essence, we can and should intervene. The behaviour of the banks towards its customers, the State and the democratic institutions of the country is simply unbelievable. Writing down debt is the option, although it is far from the mind of Fine Gael. It would make more sense to write down the debt in a State-owned bank than to extract money from homeowners through financial torture. The Minister, on our behalf, could instruct the bank to repay the people who have bailed it out. That is what he should do.

Our constituents, rightly, have been enraged by the proposed sale by Permanent TSB of 18,000 distressed mortgages to unregulated vulture funds. The loans, of course, include 14,000 family homes and are said to be valued at €3.7 billion. The so-called Project Glas reminds us that nearly 49,000 mortgages are now held by non-bank lenders and that more than half of receiverships are now initiated by vulture funds. Like other Deputies, I have experienced making contact with the credit intermediaries of the funds on behalf of families in acute distress at the prospect of losing their homes. We recently read about the experience of Mr. Charlie Weston of the Irish Independent.

Going on the track record of vulture funds and their agents, the sale of home mortgage backed securities should simply be banned by legislation. While the takeover of a whole bank or building society by another similar entity is a long-standing feature of capitalist economies, most of our constituents believe - I agree with them - that the bundling and sale of home loans in speculative instruments is an outrage which should be ended. We saw it flourishing when Mr. McCreevy and Mr. Ahern were running the State and running it over a cliff.

However, banning mortgage backed securities is not the subject of this fairly feeble Bill introduced by Deputy Michael McGrath on behalf of Fianna Fáil and, apparently, now supported by their partners in government, Fine Gael. It is laughable and ironic that Fianna Fáil and Fine Gael, the parties which left us at the mercy of vulture funds in 2007-2008 are now sponsoring and supporting this legislation. Throughout the barren austerity years from 2008, I watched Fianna Fáil and Fine Gael Deputies, including Deputy Michael McGrath, troop together into the Yes lobby to wreck our national finances, our banks and our households. Deputy Michael Noonan, in particular, bears a shocking responsibility for the situation of the sale of much of our country and for the position now faced by 14,000 Permanent TSB home mortgage holders. It was Deputy Noonan and the then Fine Gael-Labour Party Government, under the leadership of Deputies Enda Kenny and Eamon Gilmore, which greatly accelerated the sale of Irish property assets to vultures after the Davos World Economic Forum in 2014. NAMA was ordered to rapidly dispose of its remaining €22 billion loan book and we became familiar with notorious financial vultures such as CarVal, Cerberus, Goldman Sachs, Deutsche Bank, Apollo and Lone Star. The human cost to families and individuals with split or distressed mortgages already sold or threatened with sale to vulture funds can never be underestimated. Most frustrating of all is that householders tried to engage with one of the pillar banks but the bank refused to engage with them. I fear that this legislation will do little to protect those families and to keep them in their homes.

The Minister for Finance and the Governor of the Central Bank have key responsibility for the welfare of those citizens. I note that the courts have thus far generally played a positive role in keeping people in their homes. The redefinition by the Central Bank and the ECB of performing loans to include split mortgages would be a huge step forward and give Permanent TSB an alternative route to viability. I note the letter published tonight on Twitter by Deputy Michael McGrath. A huge extension of the mortgage to rent scheme would also be very positive and we have all been heartened by David Hall's iCare Housing programme and his arrangement with Allied Irish Banks, AIB. Given the public rescue of the pillar banks, we should require them to work closely to improve their liquidity ratios. Most of all, we must ensure that Permanent TSB, AIB, Ulster Bank and others do not put their home mortgage holders at the mercy of rapacious foreign vulture funds.

I thank Deputy Michael McGrath for bringing this Bill to the floor of the House. It is the second important Bill to be discussed this evening. The Government's intention not to oppose the Fianna Fáil legislation to bring vulture funds under the control of the Central Bank is to be welcomed. I hope this Bill will not suffer the same fate as many other Private Members' Bills during this Dáil and come to a halt on Committee Stage.

I would like to make two points. First, homeowners whose distressed loans are sold by banks to vulture funds must not lose any of the protections currently available to them. This is central to this Bill. Second, normalising the banking system by selling loans to vulture funds should not be at the expense of Irish citizens by making families homeless. I have no doubt that if these mortgages are sold to unregulated vulture funds, homeowners will be picked until their carcass is clean to the bone. These unregulated entities will do this swiftly and without compassion. Their modus operandi is quick profit. That is the reason for their existence. There should be no prevarication by this Government. It must protect as far as possible the interests of Irish citizens either by not allowing such sales or, if such sales are to be made, by ensuring they are made to regulated entities. This is critical.

The Rural Independent Group is happy to consider any amendments which the Government might table on Committee Stage but the fundamental point of this Bill should not change. Homes and mortgages should be sold to regulated entities and not unregulated entities. Also, the criteria used by the Permanent TSB, Allied Irish Banks and Bank of Ireland to designate mortgages as non-performing must be closely reviewed by the Central Bank. Many families are making honest efforts to repair their home loans yet these loans are still deemed to be non-performing. There should be a distinction between those who are making honest efforts to meet their commitments and those who are making no effort to do so, or those loans which are in respect of investment properties only. No family should be subject to homelessness owing to the sale of their mortgage to unregulated vulture funds. The banks are bleating that if they are allowed to sell off these loans this will free up money to lend to young couples who need mortgages. I do not believe this.

Not regulating these vulture funds is unacceptable and normalising the banking system by selling family mortgages is also unacceptable.

The worry of losing one's home or actually losing one's home is desperate. It is sad that even if a person or family has struck a deal with a bank the bank can decide that it does not want to deal with that person any longer and thus the family or the individual has to leave their home. It does not seem right that these financial institutions are allowed to sell off loans to vulture funds that are in no way connected to this State. By way of example, I know of a couple who owed €350,000 but were unable to make the repayments on it. They were in fear of losing their home but nevertheless they remained in the home for some time. Eventually, the loan was sold to a vulture fund. The family came by money and offered to repay what they owed but the vulture fund would not accept their offer. It wanted a repayment equal to double the amount of what was owed. That is the truth.

The Government and the Minister have the power to put in place laws to prevent these foreign financial institutions doing what they are doing here for profit, thus causing misery to our people. As I have previously stated, where families experience difficulty repaying their loans the local authorities should be funded to buy their loans from the mortgage holders and to allow the families remain in those homes as tenants, with an opportunity to buy back the house in the future if they get back on their feet. We should be doing that rather than allowing mortgages to be sold to foreign vulture funds.

The Irish people will not be happy with this Government if it allows Permanent TSB and Ulster Bank to sell off their loans to vulture funds. As I said, the Government and the Minister have the power to stop that happening. They need to legislate to prevent the sale of mortgages by Permanent TSB and Ulster Bank to vulture funds. I have been contacted by numerous people over the last couple of weeks who are terrified of this happening. Now is the time for the Government and the Minister to take a stand and to legislate to prevent this happening. It should have not happened before but we cannot go backwards. I am pleading with the Minister to not allow this to happen.

I, too, welcome the opportunity to speak on this Bill introduced by Deputy Michael McGrath. Any effort to put manners on these so-called vulture funds is very welcome. They are vultures. Deputy Michael Noonan is on record as saying that they were needed at the time when they came here. No vulture funds are needed. The grey crows are not needed in the field of spuds or when a lamb is being born as they try to pick they eyes out of their heads. Grey crows are vultures. These funds are worse. As far as I am concerned, they are vermin and they should not be tolerated on these shores. The late Deputy Sean Byrne and his late dad and my late dad spent time fighting in the Curragh, Clonmel and Limerick to rid this country of such people but they are back again. We saw what happened last week. The answer which the Minister, Deputy Donohoe, gave me then was nothing short of drivel.

The answer I got from the Minister for Justice and Equality, Deputy Flanagan, was to put it in writing. I did put it in writing, but did I get any acknowledgement from the Taoiseach, from the Minister for Justice and Equality or from the Minister for Finance? No, I did not. Merciless thugs beat up and evicted a family in Balbriggan. Merciless thugs - that is what is going on. These people have no sense of responsibility. We can certainly try regulation. I am all for it and will support the Bill but I do not know if is enough because these people do not respect any regulation; they do not respect borders; and they have no self respect. All they want is money, whether it be blood money or ordinary money. That is all they want and they are wreaking havoc in this country.

Why will the Government not support the Bill proposed by Deputies McGuinness and MacSharry and myself? It was drawn up by Mr. Edmund Honohan and he will be speaking on it tomorrow in the audiovisual room. How many Deputies will attend to hear what he has to say? He is a man who has the experience of the Four Courts. The lads went out to meet people in New York who have organised a social and ethical fund of up to €4 billion at minimal interest which can be used to keep people in their homes. Look at what has been done in Northern Ireland, up the road in the Six Counties. We say we want to take it over and have it as part of our country but they are showing us the way. It takes only 12 weeks in Northern Ireland after a council house has been vacated before there is someone new in it but we cannot do anything like that here.

We are beholden to these people and to certain institutions. I do not know what it is, whether it is the building out the front gate, 100 yards down the street on the right, but I fear it is because there is something sinister going on here. We do not want to tackle these people. The Ministers can talk and giggle all they like but they will not listen. They might say that I am painful to listen to but I am telling the Ministers the facts. We want no more of these people on our shores. The people are not going to put up with it. Lives will be lost which is a serious thing for me to say but people will not accept this third force in Ireland, in balaclavas, and why should they? We had them for long enough in the past. I am telling the Government that it must accept this motion and introduce regulations. I am told that in 2015 the Central Bank asked for such regulations to be introduced but the Government refused. The Government is refusing to do so again and refused to accept amendments to the Finance Bill tabled by Deputy Fitzmaurice and myself. I ask the Government to act in the name of the Irish people and the dead generations.

There is probably a book in Deputy McGrath, with all of his agricultural analogies. Deputy Catherine Murphy is next.

This issue has really struck a chord with people. It is not that people are whipping up any kind of a reaction; members of the public are absolutely outraged to the point that they will single one out and tell one just how angry they are and I am sure the Minister is hearing it himself. The reaction is visceral. Essentially, what they see is the banks that were saved continuing to save themselves at any price and they see a bank that is 75% State owned throwing people to the wolves. Permanent TSB underperformed hugely in terms of working out solutions for some of the distressed loans on its books. It is not clear what exactly the bank is now bundling and we require more information in that regard.

I am meeting people who are very worried at the moment. I have had people come to my constituency office who have acted as guarantors for their children whose loans are in this bundle. They have reached an agreement with the bank that is due for review and they are very worried about what will happen next. These are real people who are making an honest effort. The Taoiseach said that he was concerned about the people who were making an honest effort but a lot of such people's loans are in this bundle of what are described as non-performing loans. The reality is that many of these mortgages have been restructured and a huge number of the people involved are keeping up with the commitments they made. They should be allowed to continue to do that but if their loans are sold on, that will not necessarily be the case. We know that reviews happen every three years. The bank appeared before the Oireachtas committee on finance and said as much. Essentially, it is at the time of a review that people are very exposed.

I remember the answer we got when IBRC offered its loan book for sale. We were told then that the Government did not know who was going to buy the loans and we are hearing the exact same thing now. However, if the loans are being bundled to the extent to which Permanent TSB is bundling them, it is quite obvious who will buy them. We need to define non-performing loans and we need information on that. That is absolutely critical because these funds are not compelled to offer the same suite of solutions as that being offered by the mainstream banks such as mortgage-to-rent, split mortgages and so on. The same rules do not apply.

IBRC acquired mortgages at a massive discount, amounting to almost 60% but these funds can go after people for the full amount. We hear a lot of talk about moral hazard but it is interesting to note that moral hazard was never referred to by Permanent TSB in the context of commercial loan write-offs. Its attitude is very different for mortgages for homeowners. We know that the Mortgage Arrears Resolution Process or MARP is a code of conduct for mortgage arrears but we also know from the High Court it is voluntary. Essentially, it is not the case that other entities are required to offer the same measures as are required to be offered by the banks. An article in www.independent.ie, with the headline, "US vulture funds clean up as Nama sells out", quotes the CEO and co-founder of Blackstone, Mr. Steve Schwarzman, thus: " We're basically waiting to see how beaten up people's psyches get and where they're willing to sell assets". His fund is waiting until people are really crushed. That is what he said although he was not talking just about Ireland but was speaking in a wider context.

This will not be without consequences if a sizeable number of people end up losing their homes. There will be also consequences for those who are living in buy-to-let properties because tenants are very exposed in that kind of situation. It is not just the people who have mortgages who may be affected but also those who are living in buy-to-let properties. We all know there is a housing crisis and where are such people to find alternative accommodation? It is also not an inconsiderable issue as far as the State is concerned if people lose their homes, go on the housing list and require a housing assistance payment. In 2017, the HAP scheme cost €152 million. That sum is growing and HAP is unsustainable over a protracted period as a housing solution. This all has a cost but at the same time, the bank will be able to record this as a loss and write off that loss against future tax liabilities. It is not too long ago that we read newspaper articles which detailed the fact that a certain bank is unlikely to have to pay tax for the next 20 years. We need to stop this silo-based approach to looking at this issue. We need to take a more rounded approach. There are measures listed in the programme for Government that could help in this context. Why is the Government not producing its own programme for this?

In terms of the Bill itself, it does not go far enough. Perhaps a combination of this and the Bill sponsored by Deputy McGuinness might be more effective. The critical issue with regard to the silo-based approach is that people get it; they understand that this is about their next door neighbour, someone who lives down the road or a family member. They know the consequences for them. There are people who are very concerned about this who are not and will not be directly affected. There is something more going on here in that regard and I would urge the Minister to pay attention to it.

I know the Minister claims he cannot intervene in commercial decisions, but the reality is that there was an intervention made by the State to make sure these banks survived. They have survived for what? What is the point of them surviving when they will do this and cause absolute misery to people? They underperformed in terms of restructuring the mortgages. I urge the Minister to insist on the information being provided in respect of what mortgages have been restructured and are performing and, critically, also in respect of the buy-to-lets. I urge him to consider just how exposed people are and how precarious their situation will be if they end up being evicted from their homes because they are being sold because there is greater value in selling them than keeping them. These funds are not here to stay. They are here to buy assets, flip them, make as much as they can and get out. This is something that will be regretted and rightly so. The public is right on this.

I commend Deputy Michael McGrath on pursuing this issue vigorously over the course of the past six years. My time is limited. In the interests of transparency, my own mortgage is owned by a fund. I have toured through the correspondence. It is on its third ownership at this stage and I have had a tour of suburban business parks today to find the address of the particular intermediary that is dealing with me. I have never actually found the owner. I am lucky I have never had to engage with them. People who have had to do so, and legal professionals representing them, tell absolute horror stories. One hears of contempt for our legal process and our laws, complete inaction, and a lack of understanding on the part of this intermediary. It really has no interest. Its job is to manage the loan on a daily basis. The people who actually own the loan seem to be beyond any reproach. This is the importance of this Bill.

Among the worst elements is that the funds are buying the loans at a certain rate, much discounted from the actual loan. The person whose mortgage it is, however, is still being pursued for every last penny. It is the ultimate highway robbery. These funds are getting mortgages at a knock-down rate but the person whose house or family home it is, who is trying to live his or her life in that home, is being pursued for every last penny plus.

I came across one case at the weekend in which a family home has been sold and there is still a balance of €17,000. The family involved has gone into a housing assistance payment, HAP, scheme. The €17,000 is being pursued vigorously. That is what is happening because these guys think they are getting away with it.

We have to send out a message that this cannot happen to family homes. The Government has to accept Deputy Michael McGrath's legislation. He has been very fair in working with the Government on the changes that need to be made to the Bill. Let us do that before Project Glas proceeds.

Three weeks ago, people were horrified when they read in the Irish Independent that Permanent TSB was to sell off 20,000 mortgages. Family homes, small businesses and farmers were going to be left to deal with vulture funds, unregulated bodies whose sole desire is profit at all costs. The bank in which the Government is a majority shareholder was going to stand idly by. Thanks to Deputy Michael McGrath's contribution tonight, we know the EU is not forcing this issue. We should not be surprised, however. This and the previous Government have bent over backwards to facilitate the banks. They welcomed and facilitated vulture funds into our country. Rather than give the original borrower a deal, they gave an unregulated foreign entity an opportunity to come in here and make a killing. They have enabled the banks to offset their losses against any profits for up to 20 years. They continue to allow our banks to charge huge variable interest rates when the rest of Europe is charging much less.

Banks are not to be trusted. I have been working with couples and borrowers in recent years and have been watching the banks procrastinate, stall, delay and do anything rather than deal with customers who are engaging and who do want a resolution. If that is the behaviour of a regulated financial institution, what would it be like to be dealing with unregulated entities? Behind every mortgage and borrowing is a person and a family. What the banks are doing to ordinary citizens is nothing short of disgusting. While I welcome the Government's decision not to oppose this legislation tonight, what we need to see now is action. The Government must stop coming down on the side of the banks and must start coming down on the side of the ordinary citizens and customers.

Although I must be brief, I could speak for much longer on this issue as I have received dozens of emails from concerned constituents in the past week. I commend my colleague, Deputy Michael McGrath, on bringing forward yet another piece of impressive legislation in an effort to protect those in mortgage arrears. We are bringing forward this Bill to regulate vulture funds and protect consumer rights when it comes to mortgages and SME loans. Fianna Fáil believes PTSB and AIB should not be selling their loans to unregulated loan owners or vulture funds, as we all know them. They should instead be working through their non-performing loan book. Fianna Fáil is on the side of the mortgage holders who are making an honest effort to pay their mortgages. In addition to the Bill, the consumer protection code and the code of conduct on mortgage arrears need to be reviewed and made stronger.

Unfortunately I do not have time to go into the finer details of this Bill or the positive effects it will have in helping those in mortgage arrears. I want to read into the record three quotations from emails I received in the last week from those who took the time to contact my office to express their concerns. The first says: "It seems crazy that our banks are allowed to sell off loans to foreign, absentee landlords at prices they would not take from a distressed borrower who might otherwise refinance." Another states:

I am writing to you on behalf of thousands of homeowners living in Ireland. Those homeowners live in constant fear of losing their homes and becoming statistics. If we do not take definite action soon, homelessness in Ireland is likely to increase.

Finally:

[T]he news that PTSB is about to sell up to 20,000 mortgages to vulture funds has me very concerned. We already have a huge homelessness problem in Ireland and I think this move could potentially add to it by evicting more people from their homes.

Everyone in this country really helped out the banks by more than €60 billion. Now is their chance to repay the people and the distressed mortgage holders. AIB made a profit of €1.6 billion last year and paid dividends of €300 million to its shareholders, yet we want to bury people who are in mortgage arrears. I think we should start balancing the books here.

I compliment Deputy Michael McGrath on bringing forward this legislation. As we debate the Bill, there are thousands of people around the country who are concerned that their mortgages may end up in the hands of vulture funds. The reason is that vulture funds do not have the interest to work out long-term solutions. Their sole interest is to move the loan on as quickly and profitably as possible. People are in real concern and fear of losing their homes. In that regard, the Bill offers some line of defence to try to bring a level of regulation to vulture funds that does not exist at present. The intermediaries or agents on behalf of the vulture funds are regulated but not the owners themselves. That is a significant issue. I believe that if a greater level of regulation on the owners of funds was in place, the vulture funds might not have the same level of interest in these loans. That is important.

I listened to the Minister's contribution and have read it again. It is imperative that this legislation is dealt with in advance of the threatened sale by PTSB and AIB of their distressed loans and mortgages. The Minister has indicated that he will work with Deputy Michael McGrath on bringing the Bill to fruition as quickly as possible, maybe redrafting rather than doing Committee Stage amendments. I urge the Minister to deal with it in such a manner that he can be sure and we can be confident the provisions will be on the Statute Book before any of these lending institutions begin to sell their loans. If he does so, I believe the vulture funds will not buy the loans and, more importantly, those who have homes and mortgages and are under pressure at the moment will have some sense of security that a longer-term solution can be worked out for them and they will have the opportunity to remain in their own homes.

I wish to begin by saying well done to Deputy Michael McGrath on this Bill and on his consistent work over a very long period on this issue.

When the news that Permanent TSB was proposing to sell around 18,000 distressed mortgages hit the headlines, the public was angered. It was incensed. The anger was not confined to those who were actually affected but spread across the board, because there was a unity in wanting to deal with this issue. The public was annoyed because Irish citizens bailed out the banks, and it feels as though that has been forgotten. The public is also annoyed because the State is the majority shareholder in this bank and people feel that the State should step up and stop this.

We all know what it means to have a mortgage sold to a vulture fund. It means the mortgage holder will be harassed and tortured. The vulture fund will come after the mortgage holder, hoping for a quick sale, and will squeeze every last cent out of him or her, with no mercy, compassion or leeway. They are unregulated, answerable to no one, and can do what they like. The banks should be working through their loan books, working on a case-by-case basis, dealing with the distressed loans of citizens and doing the best they can to make the mortgage work out. If no solution can be found matters can be properly dealt with through the courts. Instead they are outsourcing their dirty work and are selling off what they are calling underperforming loans. They are not distinguishing between those who are genuinely trying to pay and those who are not attempting to pay. That is wrong. We must differentiate between those people. We must be on the side of ordinary citizens. We must look after those who are making genuine attempts to pay. Vulture funds will not do that.

This Bill must come before the House. It needs to be passed, but it must be in situ before this sale takes place, otherwise it will be for nothing. Citizens need to see that the Government is on their side, not on the side of the banks. In this particular instance It is heartening, and telling, that every citizen - even those not affected - feel very strongly about this issue and want to see action taken. They want to see our Government and our TDs back them, instead of the banks.

I wish to thank Deputy Michael McGrath again for the preparation of this Bill, and the other contributors to this debate this evening.

As the Minister said earlier in the debate, it is important to put the issue in its broader context. Much has been done by the Government to help keep people in their homes, including the credit servicing legislation, the CCMA, changes to the personal insolvency regime and the Abhaile scheme.

Non-performing loans have reduced by 60% from their peak in 2013. However, the banks, including the banks in which the State has a significant investment, still need to further address their non-performing loan books. One way to do this, and to do this in large numbers, is to sell groups of loans to other entities which may not be regulated by the Central Bank. As things currently stand, if the loan owner is unregulated, they can only operate in Ireland through a regulated credit servicing firm which is regulated by the Central Bank. However, public concern about the possible actions of unregulated loan owners means that we must do something to reassure the public that these funds will not have carte blanche to do anything they want, regardless of the effect on the householders.

The fears and concerns of borrowers whose loans are being sold are real, but I would nonetheless encourage them to resume contact with their existing lender to ascertain their position and to see what can be done to help resolve their situation and address their position. I accept that there are issues with the legislation as currently drafted and that we will need to put a significant amount of work in to address these issues. The Minister has made a commitment that his officials will work with the Deputy in order to make the legislation more effective and, where necessary, ensure that it can be implemented on a practical level.

We have to get this legislation right in order to make sure that it does what it is intended to do and does not have any negative unintended consequences. We will have to pay particular attention to the definition of credit agreement owner. The policy intent, as stated in the explanatory memorandum, is that the owners of mortgage loans and of SME loans will be regulated. We could explore this in more detail later. Should owners of consumer loans not also be included? What about corporate loans? What about loans which were never the subject of consumer protection legislation such as intra-company loans? Let us be perfectly clear. The Government is supporting this legislation, but we need to get it right and we will work together to get it right.

As the Minister said, he is meeting with the main banks this week and last week as part of the regular engagement process. He has said that he will take these opportunities to again make it clear to the banks that they need to be fully cognisant of customers' concerns about their actions. The Minister has asked the Central Bank to review the existing code of conduct on mortgage arrears, CCMA, to examine areas where it may need to be strengthened and to report to him on the issue as soon as is practically possible. As things stand, the CCMA is a statutory code which provides a strong consumer protection framework to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner. The code is part of financial services legislation and applies to all regulated financial service providers. This Bill seeks to apply the CCMA to mortgages which are not already covered by the code. Presumably this would include buy-to-let mortgages and mortgages where the borrower is not in any danger of falling into arrears.

The Bill has a number of provisions in relation the Central Bank, and it appears that it may be appropriate that this Bill be referred to the European Central Bank for its observations. Under Standing Order 149(3), it would be a matter for the relevant committee to consult with the European Central Bank. I appreciate that there is an urgency in relation to this legislation because of the pending sale of Permanent TSB loans.

I also welcome the Bill as introduced by the Deputy and support the policy intent behind it, but it will take significant work to develop it to a level where it can be an effective piece of legislation. The Government has committed to support this Bill, and I and the officials in the Department will provide whatever assistance that we can to this development.

The figures I am about to present have been verified by Interest Rate Check Ireland. They relate to a man and his wife, who have five young children, who took out a mortgage in March 2009. It appears that no legal advice was given, as can be seen in the loan letter offer. The interest rate clause is also ambiguous. The APR was 7.8%, with the interest rate at 7.45%. The profit margin for the bank was 5.95% over the European Central Bank, ECB, rate at the inception of the loan. This profit margin rose to 6.76% over the ECB rate. We believe this to be exceptionally high and unjust. As can be seen in the report, the bank was methodical in not applying payments as they fell due. Payments were applied one month after payment.

The bank offered a discount in 2012 and reduced the rate, but this was later reversed in 2014 when the bank increased its rates, again to an exceptionally high level. This had the result of charging the client interest of over €107,000 over an eight year period. The cost of credit for this period, if using the ECB repo rate as the basis of the funding, would have been €8,130.82. This means that the bank made a profit of €99,466.66 over this eight year period. Had the bank offered a reasonable interest rate, for example the ECB rate plus 1%, the account balance would have been €119,241.37. The interest total for this period would have been €20,917.98 had the bank acted thus. The account would then have been €86,679.50 less than what was actually borrowed - some €200,000. It appears that this was a very unfair contract.

The client has made payments of €101,736 to date, and the account balance now exceeds the original loan by over €5,000. We believe that the contract is so unfair that if the client had been offered legal advice and been told what the cost of this product was the advice would have been not to enter into this contract. This contract in effect means that after eight years the client would owe more than what was borrowed while having made repayments of over €107,000. On this basis we believe that no reasonable person would ever have entered into this contract had he or she known the full facts.

This is what is happening out there at the moment. This is legalised robbery. I commend Deputy Michael McGrath on bringing forward this Bill.

I hope we will have a successful outcome. The people are depending on us to fight their corner and case.

As we discuss vulture funds and the stress they are causing to thousands of people, I cast my mind back to and reflect on the property advertisements 15 years ago that sold people a utopian dream. Property supplements in the national and local newspapers ended up being bigger than the newspapers and there were advertisements by the banks, one bigger than the next, offering, ultimately, 100% mortgages. The advertisements sold people the dream of owning an idyllic home. In many cases, the homes were outside Dublin in commuter towns such as mine in County Meath. With every passing month, the price of homes included in the advertisements became bigger and bigger, as did the dream being sold. However, what the advertisements were spinning has not come to pass for many of the commuter towns being marketed. In my county, dreams of having things such as a rail line to Navan have been snuffed out by the Government's new capital plan. Therefore, even for those who can afford to service their mortgage, the supporting infrastructure they were promised for their families is not in place. For the thousands more struggling to finance their mortgages which the banks beat them in the door to give them in the first place, the dream has turned sour. Banks that could not give enough sugar candy to get customers in the door in the first place in order that they could give them all of the money in the world have now, courtesy of the sale of mortgages to vulture funds, suddenly turned into the dentist looking to extract every tooth clean out of their heads. One begins to wonder if we dreamed it. Did we dream meeting the bank manager 15 years ago when he or she was clearing his or her schedule in his diary to bring people in? Now it is not possible to meet him or her; nor is it possible to meet a human being to try to work out an equitable deal because the loan has been thrown at the sharks.

I have raised with the Taoiseach the fact that two weeks ago a viable SME in my home town of Navan was put out of business. At 7 a.m., while it was still dark, a vulture fund seized a manufacturing building. When the staff arrived at 7.30 a.m., they were told to go home. The owner had pleaded with the fund to try to work out a solution to the debt problem, given that he had a viable business. However, it swooped and 15 people lost their jobs. Acting to defend citizens must fall within the remit of the Dáil because their protection from the hell the banks have created is essential.

I acknowledge that the Minister and the Government will support the Bill in general, for which I thank him and it.

I am delighted to be afforded the time to speak to our party's Bill and commend our spokesperson, Deputy Michael McGrath, for seeking improved regulation of credit servicing firms. What we have seen happen in the past few weeks with some of the financial institutions is nothing short of a Pontius Pilate cop-out. In turn, we have seen the owners of distressed mortgages being thrown to the wolves or, should I say "vulture funds"?

I, too, reiterate that any solution put in place will only be to the benefit of borrowers who have made a genuine attempt to be helpful and co-operative with the lenders within the requirements of the code of conduct. In the Minister's opening deliberations in defending the Government's past performance he played on the reduction in the number of repossessions by financial institutions. Will he clarify if there are other reasons for the drop in the number of repossessions? For instance, it is said Permanent TSB has a difficulty with the enforceability of its mortgage deeds, that is, that bad contracts were drawn up. If they were to be sold to a vulture fund, we would have the worse case scenario. Why? The vulture fund might not be able to go to court to seek repossession on foot of the mortgage deed and would have to sue everyone for the debt due and owing.

We have enough genuine previous mortgage holders who now find themselves without a second chance of ever securing a mortgage again.

I commend my colleague, Deputy Michael McGrath, for introducing the Bill to regulate vulture funds and protect consumer rights related to mortgages and SME loans. Throughout the country people are having sleepless nights and going through the day in a fog of despair, stressed about what might befall them. My colleague, Deputy Shane Cassells, spoke about their dreams going up in smoke and turning into nightmares.

Our core belief is that Permanent TSB and AIB should not be selling loans to vulture funds. My party and I are on the side of the mortgage holders who are making an honest effort to repay their mortgage. The Minister is failing to protect adequately borrowers who have found themselves in arrears, despite the majority co-operating with their lender. It is neither acceptable nor good practice to allow vulture funds to be unregulated. We must think of the social and human cost of this behaviour.

It is important to note that the Central Bank of Ireland sought the power to regulate loan owners, not just the intermediaries, but the Government has still not brought forward the legislation to deal with the matter. It is, therefore, up to Deputy Michael McGrath and the Fianna Fáil Party to deal with it. The bottom line is that it is the loan owners who make key decisions such as the setting of the interest rate and, crucially, when to enforce a loan. They do so beyond the reach and control of the Central Bank of Ireland.

As of now, 11,314 family homes and 6,778 buy-to-let properties are owned by unregulated loan owners. Potentially, Permanent TSB could more than double that number. This is not normal banking and the Government cannot wash its hands of the issue. It has a moral, civic and social duty to ensure it deals with it properly and appropriately. In commending the Bill to the House, it must be treated as priority legislation. Deputy Michael McGrath, the Fianna Fáil Party and I will not allow it to gather dust. It must be enacted with speed and haste.

Question put and agreed to.
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