As the Deputy will be aware, Relationship Frameworks are in place between the Minister for Finance and the banks in which the State has a shareholding. Under these Relationship Frameworks, the relevant banks are required to consult with the Minister as part of any loan sale being proposed. This consultation process does not require input from the Central Bank of Ireland.
I have been advised by the Central Bank of Ireland that Provision 3.11 of the Central Bank’s Consumer Protection Code 2012 (“the Code”) requires that, where a regulated lender intends to transfer all or part of its ‘regulated activities’ to another regulated entity, it must provide advance notification to both the Central Bank and affected consumers. Specifically, a lender must provide a consumer with at least 2 months’ notice before transferring all or part of its loan book covered by the Code to another person.
Most loan agreements include a clause that allows the original lender to sell the loan on to another firm, regardless of whether the loan is classified as performing or non-performing.
When a loan is sold on to another regulated entity, the relevant Irish and EU consumer protections continue to apply. 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’.
If a borrowers’ mortgage protection policy and/or home insurance policy was obtained through the original lender, and is thus part of the lender’s group insurance scheme, such policies may be impacted if the mortgage is transferred to a new loan owner, either as a result of switching mortgage providers or a loan sale.