Dáil Éireann Debate, Thursday - 14 December 2017
100. Deputy Michael McGrath asked the Minister for Finance if he or the Central Bank has a record of the number of commercial loans that have been sold on by the original underwriter; if so, the details of same; if the Central Bank must be notified when a commercial loan has been sold on; his views on the fact that a commercial loan could be sold on to a competitor of the borrowers; and if he will make a statement on the matter. [53759/17]
Amharc ar fhreagraI have been informed by the Central Bank that it does not maintain a record of the number of commercial loans sold on by the original underwriter. Portfolio sales are considered as part of normal supervisory engagement where they are sufficiently material.
Typically with an asset loan sale, in circumstances where there are permissible contractual terms which allow the sale of the loan, the Central Bank would be aware of the transaction planning, and would be notified for good order by the bank once the transaction is completed. The Central Bank monitors the capital and financial implications of an asset sale on the bank meeting its regulatory obligations.
The Deputy will be aware that legislation and regulations have been implemented by the Oireachtas and Central Bank to protect SMEs when dealing with regulated and unregulated firms. Insofar as a loan is captured by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, then the protections of that Act will apply. These include the protections of Irish financial services legislation, including Central Bank Codes where they apply for the type of loan in question. Also, under Provision 6.1 (c) of the Authorisation Requirements and Standards for Credit Servicing Firms 2015, a credit servicing firm is required to notify the Central Bank in advance of a new loan portfolio or client being taken on which results in it conducting credit servicing activities covered by the Act.
Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that 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 issued by the Central Bank of Ireland.
Under the 2015 Act, therefore, 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. Furthermore, it is 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.
Also, following a review in 2015 of the Central Bank Code of Conduct for Business Lending to Small and Medium Sized Enterprises, the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 were made. They came into operation for regulated financial service providers (other than credit unions) on 1 July 2016 and, in the case of credit unions, on 1 January 2017.
