The Central Bank has indicated that, in the event of a regulated entity withdrawing from the Irish market, the withdrawal must be undertaken in accordance with the provisions of Irish financial services legislation, including the Central Bank’s codes of conduct and specifically, Provision 3.11 of the Consumer Protection Code 2012.
Under Provision 3.11 of the Code, a regulated firm that intends to cease operating, merge with another, or to transfer all or part of its regulated activities to another regulated firm, must:
- provide affected consumers with at least two months’ notice to enable them to make alternative arrangements if they so wish;
- ensure all outstanding business is properly completed prior to any transfer, merger or cessation of operations; or, in the case of a transfer or merger, inform customers as to how continuity of service will be provided following a transfer or merger; and
- in the case of a merger or transfer of regulated activities, inform customers that their details are being transferred to the other regulated entity, if that is the case.
More generally in relation to loans, where they are sold or transferred to another regulated entity, the consumer protections in place for borrowers will not change. In addition, the legal rights and terms and conditions of a customer’s mortgage agreement, including in relation to the interest rate, remain in place following a loan sale/transfer.
It is also worth noting that under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 if a loan is transferred or sold, the holder of the legal title to the credit must be regulated and must act in accordance with Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers whose loans are sold or transferred, maintain the same regulatory protections that they had, including under the various Central Bank statutory Codes of Conduct, such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA).
The Central Bank has also advised that it’s supervision of any bank that withdraws from the market will be focused on ensuring that its customers are treated fairly, that it remains in compliance with the letter and spirit of regulatory requirements. The Central Bank has clearly communicated the requirement for a customer-focused approach to be taken in all aspects of their business throughout the period of change and that they ensure that customers understand what the withdrawal means for them.
Within the regulatory and contractual framework as outlined above, it is a commercial matter for individual banks and other lenders to set their lending interest rates. Neither I nor the Central Bank have a role in prescribing or setting interest rates on individual loans.
The Deputy may also wish to note that, on 25 June 2021, the Central Bank issued an industry letter regarding its consumer protection expectations in the changing retail banking landscape. These expectations reflect the Central Bank's assessment of possible risks to consumers during periods of change and reinforce previously communicated expectations, based on it's experience of prior events. The Central Bank also expects that by clearly outlining its expectations, this will inform regulated entities’ actions and decisions to ensure that customers’ interests are protected and potential risks are mitigated.
