I am informed by the Central Bank that most loan agreements include a clause that allows the original lender to sell the loan on to another firm.
The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (the 2015 Act) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm. Under the 2015 Act, if the firm that bought loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’ which is regulated by the Central Bank, and must comply with the provisions of the Code of Conduct on Mortgage Arrears (CCMA) and the Consumer Protection Code.
The CCMA applies to the mortgage loan of a borrower which is secured by his/her primary residence. When the original lender sells or transfers a loan, the borrower is still entitled to the protections of the CCMA and the Mortgage Arrears Resolution Process (MARP) must continue to be followed by the credit servicing firm.
If a loan is restructured by the original lender, the restructured arrangement should be continued after the sale of the loan and the next steps of the MARP process applied.
The CCMA also provides that alternative repayment arrangements are reviewed at intervals that are appropriate to the type and duration of the arrangement, including at least 30 calendar days in advance of an alternative repayment arrangement coming to an end. A lender must also carry out a review of an alternative repayment arrangement at any time, if requested by the borrower.
The arrears handling provisions in Chapter 8 of the Central Bank’s Consumer Protection Code apply in respect of loans held by a personal consumer to which the CCMA does not apply.
When the original lender sells or transfers a loan, the borrower is still entitled to the protections of the Consumer Protection Code, which must be complied with by the credit servicing firm.
If a loan is restructured by the original lender, the restructured arrangement should be continued after the sale of the loan.
As the Deputy will be aware, the Government decided last week to support the FF Private Members Bill in relation to the regulation of loan owners. The Government is committed to working with you, Deputy McGrath and the House to improve the Bill, with a view to addressing any difficulties that might arise with it as currently drafted. I have also asked the Central Bank to carry out a review of the Code of Conduct on Mortgage Arrears (CCMA) to ensure it remains as effective as possible and for the review to be completed as soon as possible.
