I propose to take Questions Nos. 82 and 86 together.
Government policy has been that the sale of a loan book should not result in a loss of protections for borrowers. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 restored protections to borrowers by making credit servicing a regulated activity and requiring firms which undertook credit servicing to be authorised by the Central Bank. Under the Act, purchasers of these 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 Act also prevented loan owners giving instructions to credit servicing firms which would be prohibited if the owner was regulated and also prohibited the credit servicing firm from implementing such instructions. Therefore, it is not possible for unregulated entities to act on behalf of lenders.
Regulated credit servicing firms and other regulated entities 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 and the Code of Conduct on Mortgage Arrears 2013 (CCMA).
Provision 56 of the CCMA provides that a regulated entity may only commence legal proceedings for repossession of a borrower’s primary residence where the regulated entity has made every reasonable effort under the CCMA to agree an alternative repayment arrangement with the borrower or his/her nominated representative, and the specific timeframes set out in the CCMA have been adhered to or the borrower has been classified as not co-operating and notified in accordance with the CCMA.
I should also say that a customer who has a complaint against a regulated financial service provider which is not resolved by the provider’s internal complaints mechanism may make a complaint to the independent Financial Services and Pensions Ombudsman.
The Deputy may also be aware of a recent Private Member’s Bill which would require the regulation of loan owners. The Government supports the intent behind the Bill and has committed to assisting the Deputy in improving the Bill to make it more effective.