Dáil Éireann Debate, Wednesday - 17 April 2019
90. Deputy Brendan Griffin asked the Minister for Finance if his Department will investigate the removal of small business customers overdrafts accounts and the sale of debt by a bank (details supplied); and if he will make a statement on the matter. [17964/19]
Amharc ar fhreagraThe Deputy will be aware that a reduction in the level of non performing loans (NPLs) across European banks is a major priority for the European banking regulator, the SSM. Given this position, banking regulators have tasked each bank with developing and implementing strategies with the expectation that their ratios will be reduced towards the European average. Despite the significant number of restructures undertaken, given the sale of reduction required, it was inevitable though unfortunate, that loan sales would be required.
I should highlight for the Deputy that in my role as Minister for Finance, I cannot stop loan sales even by the banks in which the State has a shareholding. Decisions in this regard, as well as the criteria used to decide the make-up of loans to be included, are the sole responsibility of the board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks which are legally binding documents that I cannot change unilaterally. These frameworks which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.
It is important to reiterate that the protections in place for all borrowers before a sale, either by way of securitisation or otherwise, remain unchanged. Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018, which came into effect on 21 January 2019, if a loan is transferred the holder of the legal title to the credit must now be authorised by the Central Bank as a credit servicing firm. Such credit servicing firms must act in accordance with Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale.
Furthermore, in terms of overdrafts being converted into a loan facility and transferred to a Retail Credit Firm, customers have the right to appeal the withdrawal of any undrawn funds (from the overdraft facility) to the Credit Review Office (CRO). The CRO is able to review cases where credit facilities up to €3m are refused, withdrawn, or offered on unreasonable conditions. Details of how to appeal to the CRO can be found on the website www.creditreview.ie.
Notwithstanding that the banks' independence in these matters is protected as previously discussed, officials from my department contacted AIB and it provided the following response:
"As is standard for a portfolio sales process, it is a requirement to withdraw overdraft facilities and convert these facilities into term loans. Please see detailed below the process and infrastructure in place to support overdraft customers as they transition to Everyday DAC:
- "Customers included in the portfolio sale, with an overdraft facility, have been issued with a letter providing notification of the withdrawal of the overdraft facility. As part of this notification, customers have been advised that they can utilise the full facility, including accessing available funds, throughout the notification period which will be 65 days. This provides customers with the option of availing of the full credit facility ahead of the withdrawal date.
- "Customers have also been advised that they can retain working current a/c’s (which must be maintained in a credit position) post closure of sale. This means customers can retain their bank a/c’s and there is no impact from an operational perspective in terms of physical movement of a/c’s, debits etc.
- "At the end of the notification period, the drawn balance will transfer with other Loans to Everyday Finance DAC. Any overdraft facilities with a €0 or credit balance will not transfer and will remain with AIB operating as a current/credit account.
- "As outlined in the notification letter, SME customers have the right to appeal the withdrawal of credit and the appeal will be heard in line with the current independent SME/Credit Review Office appeals process."
