Dáil Éireann Debate, Wednesday - 21 February 2018
88. Deputy Michael McGrath asked the Minister for Finance if unregulated loan owners are permitted by the Central Bank to have direct contact with the borrower in relation to their loan, for example, to discuss a possible restructuring of the loan; and if he will make a statement on the matter. [8989/18]
Amharc ar fhreagraThe Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”) was introduced in July 2015 to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm. The 2015 Act introduced a new regulatory regime in respect of Credit Servicing Firms, bringing such firms within the Central Bank’s regulatory remit.
Under the 2015 Act, if a firm who bought loans from an original lender is unregulated, then the loans must be serviced by a Credit Servicing Firm who is authorised and regulated by the Central Bank.
Credit servicing firms must comply with all relevant requirements of financial services legislation, including the regulatory requirements set out in the Central Bank’s statutory Codes of Conduct and Regulations. These requirements include:
- the Consumer Protection Code 2012;
- the Code of Conduct on Mortgage Arrears 2013;
- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Small and Medium-Sized Enterprises) Regulations 2015;
- the Minimum Competency Code 2017 and the Minimum Competency Regulations 2017;
- Part V of the Central Bank Act 1997; and
- Fitness and Probity Regulations and Standards issued under Part 3 of the Central Bank Reform Act 2010.
Credit servicing firms are firms who manage or administer loans on behalf of the unregulated firm. ‘Credit servicing’ includes all interactions with the consumer in respect of the loan, including:
- Notification of changes in interest rates or payments due;
- Collecting repayments on the loan;
- Managing complaints;
- Assessing the consumer’s financial circumstances in cases of financial difficulties; and
- Communications about potential restructuring arrangements.
The 2015 Act ensures that borrowers whose loans are sold to unregulated third parties maintain the regulatory protections they had prior to the sale.
