I must now deal with a postponed division relating to the motion regarding vulture funds. On Tuesday, 28 May 2019, on the question, "That the amendment to the motion be agreed to," a division was claimed. In accordance with Standing Order 70(2), that division must be taken now.
Vulture Funds: Motion (Resumed) [Private Members]
The following motion was moved by Deputy Michael Harty on Tuesday, 28 May 2019:
That Dáil Éireann:
notes that:
— the Programme for a Partnership Government commits to providing greater protection for mortgage holders, tenants and small and medium-sized enterprises whose loans have been transferred to non-regulated entities (‘vulture funds’);
— chapter 8 of the Central Bank of Ireland’s Consumer Protection Code 2012 includes a requirement that ‘where an account is in arrears a regulated entity must seek to agree an approach (whether with a personal consumer or through a third party nominated by the personal consumer) that will assist the personal consumer in resolving the arrears’;
— Article 3 of the European Union’s directive on unfair terms in consumer contracts provides that: ‘A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract, to the detriment of the consumer’;
— the decision by Allied Irish Banks (AIB) to sell a significant volume of non-performing buy-to-let loans to Cerberus, involving buy-to-let loans with an approximate value of €1 billion involving at least 2,200 customers;
— the decision by AIB was preceded by the sale of 6,139 loans linked to family homes by Permanent TSB, despite such accounts meeting the terms of their agreed arrangements;
— research conducted by Free Legal Advice Centres (FLAC) indicates that there are currently 111,504 restructures of principal dwelling house mortgages in place, of which more than 27,000 are split mortgages, more than 36,000 are capitalisation of arrears arrangements, and more than 13,000 are term-extensions; and
— the most recent statistical mortgage arrears report from the Central Bank of Ireland, to the end of the last quarter of 2018, concerning principal dwelling houses shows that the significant majority of approximately 14,000 loans acquired by unregulated loan owners in the course of the last quarter are performing restructures; and
calls on the Government to:
— accept the conclusions reached by FLAC that there is a ‘significant inequality of arms between the lender and borrower’ where the borrower ‘may have no meaningful influence on the content of the terms of the loan and may be wholly unaware that the lender is reserving the right to sell the loan on to an entity of its choice’;
— ensure that the Central Bank of Ireland’s Report on the Effectiveness of the Code of Conduct on Mortgage Arrears in the context of the Sale of Loans by Regulated Lenders, which was furnished to the Minister for Finance in 2018, be given legislative force to ensure that all parts of the code are expressly admissible in repossession hearings;
— recognise that so-called ‘vulture funds’ pose an immediate and overwhelming threat to borrowers in rural and urban Ireland;
— accept that unregulated entities have demonstrated a clear unwillingness to abide by voluntary codes of conduct; and
— revise the Code of Conduct on Mortgage Arrears in order to ensure that provisions 38 and 39 mandatorily require lenders to provide solutions.
Debate resumed on amendment No. 2:
To delete all the words after “Dáil Éireann” and substitute the following:
"notes that:
— significant progress has been made in reducing the level of mortgage arrears;
— Central Bank of Ireland statistics show that the number of primary dwelling mortgage accounts in arrears over 90 days has fallen from 98,700 in September 2013 to 44,000 at end December 2018;
— the level of these arrears has now declined for twenty one consecutive quarters, and the number of accounts in arrears over 720 days has declined for fourteen consecutive quarters;
— 111,500 mortgage accounts have also been restructured and 87 per cent of these accounts are deemed to be meeting the terms of their current restructure arrangements;
— the Government has advanced and supported a range of measures which have assisted borrowers experiencing genuine difficulty in meeting their mortgage or other commitments, and which have also maintained and increased the consumer protections available to borrowers whose loans have been sold;
— in particular, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 ensured that the Central Bank of Ireland regulatory framework continued to be available to borrowers where loans were sold and the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 now provides that the legal owners of credit must be regulated by the Central Bank of Ireland;
— all regulated entities are legally obliged to comply with the Central Bank Code of Conduct on Mortgage Arrears 2013 and the Consumer Protection Code 2012, including the provisions of chapter 8 of the Consumer Protection Code;
— it is an independent matter for the Central Bank of Ireland to formulate the codes it makes pursuant to statute, and that the Bank has amended such codes as appropriate from time to time;
— in 2018 the Central Bank of Ireland undertook a review of the Code of Conduct on Mortgage Arrears specifically in the context of the sale of loans and it found that, where borrowers engage with the process, the Code of Conduct on Mortgage Arrears is working effectively and as intended;
— the Central Bank of Ireland is of the view that in the context of loan sales, the current regulatory framework provides sufficient protections to consumers;
— there is a requirement on businesses to comply with the terms of the European Union directive on unfair terms in consumer contracts as transposed into Irish law; and
— it is important to ensure that there continues to be a functioning, strong and sustainable banking and financial system which meets the needs of existing and new borrowers and the general public, consistent with a high level of consumer protection; and
calls on the Government to:
— support and, as necessary, work with the Central Bank of Ireland as it carries out its important financial stability and consumer protection functions;
— continue to support and assist households in mortgage arrears and, recognising the importance of the family home, to maintain arrangements which will enable households to restructure unsustainable debts in a fair manner;
— keep the financial services legislative and regulatory framework under review to ensure that the level of consumer protection continues to be up-to-date; and
— continue to pursue overall prudent fiscal and economic policies that will deliver high levels of employment and positive economic development."
- (Minister for Finance)
Amendment again put:
The Dáil divided: Tá, 31; Níl, 64; Staon, 0.
Tá
- Barrett, Seán.
- Brophy, Colm.
- Bruton, Richard.
- Burke, Peter.
- Canney, Seán.
- Cannon, Ciarán.
- Carey, Joe.
- Corcoran Kennedy, Marcella.
- Creed, Michael.
- D'Arcy, Michael.
- Daly, Jim.
- Deasy, John.
- Doherty, Regina.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Flanagan, Charles.
- Griffin, Brendan.
- Halligan, John.
- Harris, Simon.
- Heydon, Martin.
- Humphreys, Heather.
- Kehoe, Paul.
- Kyne, Seán.
- Madigan, Josepha.
- McEntee, Helen.
- Moran, Kevin Boxer.
- Neville, Tom.
- Noonan, Michael.
- O'Dowd, Fergus.
- Ross, Shane.
Níl
- Brady, John.
- Brassil, John.
- Breathnach, Declan.
- Broughan, Thomas P.
- Browne, James.
- Burton, Joan.
- Butler, Mary.
- Casey, Pat.
- Cassells, Shane.
- Chambers, Jack.
- Collins, Joan.
- Collins, Michael.
- Connolly, Catherine.
- Coppinger, Ruth.
- Cowen, Barry.
- Crowe, Seán.
- Curran, John.
- Doherty, Pearse.
- Donnelly, Stephen.
- Dooley, Timmy.
- Ellis, Dessie.
- Ferris, Martin.
- Fitzpatrick, Peter.
- Fleming, Sean.
- Grealish, Noel.
- Harty, Michael.
- Haughey, Seán.
- Healy, Seamus.
- Howlin, Brendan.
- Kenny, Martin.
- Lahart, John.
- Lowry, Michael.
- Martin, Catherine.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- Mitchell, Denise.
- Moynihan, Aindrias.
- Moynihan, Michael.
- Munster, Imelda.
- Murphy O'Mahony, Margaret.
- Murphy, Catherine.
- Murphy, Eugene.
- Murphy, Paul.
- Nolan, Carol.
- O'Brien, Darragh.
- O'Callaghan, Jim.
- O'Keeffe, Kevin.
- O'Loughlin, Fiona.
- O'Reilly, Louise.
- O'Rourke, Frank.
- O'Sullivan, Jan.
- O'Sullivan, Maureen.
- Ó Broin, Eoin.
- Ó Caoláin, Caoimhghín.
- Ó Snodaigh, Aengus.
- Penrose, Willie.
- Pringle, Thomas.
- Quinlivan, Maurice.
- Shortall, Róisín.
- Smyth, Niamh.
- Stanley, Brian.
- Tóibín, Peadar.
- Troy, Robert.
Staon
Tellers: Tá, Deputies Seán Kyne and Peter Burke; Níl, Deputies Mattie McGrath and Michael Collins.
Amendment declared lost.
I move amendment No. 1:
To delete all words after "last quarter are performing restructures;" and substitute the following:
"— FLAC has concluded that there is a 'significant inequality of arms between the lender and borrower' where the borrower 'may have no meaningful influence on the content of the terms of the loan and may be wholly unaware that the lender is reserving the right to sell the loan on to an entity of its choice';
— the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 passed all stages last year and under that legislation so called 'vulture funds' are now regulated by the Central Bank of Ireland;
— there is no legal obligation to honour a restructured arrangement once the loan is sold to a new lender; and
— there is no legal obligation to transfer the full and complete file on the borrower to the new lender when the loan is transferred thus making it very difficult for the borrower to challenge the position of the new lender; and
calls on the Government to:
— ensure that the Central Bank of Ireland's Report on the Effectiveness of the Code of Conduct on Mortgage Arrears in the context of the Sale of Loans by Regulated Lenders, which was furnished to the Minister for Finance in 2018, be given legislative force to ensure that all parts of the code are expressly admissible in repossession hearings;
— legally oblige a lender to transfer the borrower's full and complete file, along with correspondence, to the new lender when a loan is transferred or sold;
— legally stipulate that a restructured arrangement must be adhered to when the loan is transferred or sold to a new lender;
— recognise that so-called 'vulture funds' pose an immediate and overwhelming threat to borrowers in rural and urban Ireland;
— accept that unregulated entities have demonstrated a clear unwillingness to abide by voluntary codes of conduct; and
— revise the Code of Conduct on Mortgage Arrears in order to ensure that all lenders must consider the options outlined in provisions 38 and 39."
Amendment agreed to.
Motion, as amended, agreed to.