Dáil Éireann Debate, Tuesday - 17 January 2017
62. Deputy Pearse Doherty asked the Minister for Finance the legislative and regulatory steps he will take to ensure that the owners of mortgage credit are fully regulated as opposed to the credit servicers; and if he will make a statement on the matter. [1734/17]
Amharc ar fhreagra293. Deputy Joan Burton asked the Minister for Finance the proposals he is currently considering to ensure mortgage holders, tenants and SMEs that have loans or credit from non-bank lenders or vulture funds are fully protected; if he is considering extending the provisions of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 in this regard; and if he will make a statement on the matter. [1668/17]
Amharc ar fhreagraI propose to take Questions Nos. 62 and 293 together.
As the Deputy will be aware, I have taken steps to ensure that borrowers whose loans are sold retain the same protections which they had prior to the sale. This was effected through the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'.
Under the Act, purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank. The significant point is that we regulated at the point of contact with the customer. Therefore relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which came into operation in July 2016. It is also important to highlight that the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.
In addition, to further enhance the protection of borrowers, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 ensures that a regulated credit servicing firm cannot do something, or fail to do something, which would be a prescribed contravention if performed, or not performed, by a retail credit firm. The legislation also prevents the owner of credit from instructing a regulated credit servicing firm to perform such an action. Therefore the borrower is protected because the owner cannot give an instruction that would breach the rules but also the instruction cannot be implemented by the regulated credit servicer, over whom the Central Bank has oversight as a regulated entity.
Nonetheless, my Department will continue to keep all relevant legislation under review in order to ensure that borrowers whose loans have been sold are properly protected and do not lose any protections which they previously enjoyed. In addition, the Department of Finance expect that the Central Bank, as regulator of credit servicing firms, will be vigilant in this area and raise any specific instances where they have found consumers have not had their protections upheld or that their positions have been disadvantaged.
In relation to tenants, landlord-tenant relations are governed by multiple pieces of legislation (mainly under the aegis of my colleague, the Minister for the Housing, Planning, Community and Local Government). The landlord/owner of the property is restricted in what they can do in relation to removal of tenants from a property. These restrictions are the same whether the landlord bought the property, built the property themselves, became a landlord as a result of renting out what was formerly a principal dwelling house or acquired the property by other means such as enforcing loans secured on the property.
