Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Chairman, colleagues, the Minister of State and officials for attending. This is Committee Stage of the Bill. I acknowledge the work of the Department and the Minister of State. We have worked closely together to develop these proposals since the Bill passed Second Stage, with a view to reaching broad agreement on the direction of the Bill. For me and my party, the core objective of this legislation is to ensure that loan ownership becomes a regulated activity, and to change the position which has been in law since 2015, whereby those purchasing loans, whether commercial loans or mortgages, are required to appoint an intermediary who acts as a credit servicing agent or credit servicing firm, and under the 2015 Act, that intermediary has to be a regulated entity. From my perspective, the loan owner should be directly regulated and accountable to the Central Bank, so that the full suite of powers available to the Central Bank relating to all other regulated entities would apply. That is the key objective that I have in seeking to advance this legislation. The litmus test is really whether all of the Central Bank codes apply, such as the consumer protection code, the code of conduct on mortgage arrears, and lending to small and medium-sized enterprises regulations, and whether the full suite of powers set out in the 2013 supervision and enforcement legislation applies and is available to the Central Bank so that, if necessary, the Central Bank has the power to inspect, investigate and, if necessary, to take enforcement action. Those who own the loan and ultimately make all of the important decisions about its future, such as whether a person keeps a home, or about a business or farm, should be directly regulated and accountable to the Central Bank. The Bill is not a panacea for dealing with all non-performing loan, NPL, issues and arrears, but it is an important and necessary step.

Other changes which we have spoken about on many occasions are required.

These include changes to the code of conduct on mortgage arrears. That code is being reviewed and my party has proposals in that regard as well.

In recent weeks, since the passage of the Bill on Second Stage, we have worked closely with the Department to essentially rewrite the Bill and put it in a format which can hopefully come through Committee and Remaining Stages and which achieves the core objective of the Bill.

Section 1 is proposed to be deleted. I have shared with other members our speaking notes on the legislation.

Having considered the matter in more detail and focusing on the objective of ensuring that loan owners are regulated by the Central Bank, I am bringing forward changes to the definitions. There are advantages to using an existing authorisation regime already in use by the Central Bank rather than creating a new type of regulated entity, the credit agreement owner, as originally proposed. Therefore, the current definition section is proposed to be deleted and a new set of definitions will be introduced.

There are advantages to using an existing regime. It means that the Central Bank already has an authorisation process in place and has already set a fitness and probity regime. Using the credit serving regime that was put in place in 2015 should help Irish regulated firms when the proposed EU directive on credit serving is put in place.

I appreciate the Central Bank recommended that the retail credit firm regime be used and I may wish to return to this on Report Stage. Members will have read the submission made by the Central Bank to Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach during the scrutiny phase. The Central Bank came down on the side of opting for the retail credit firm model. I understand there has been much engagement between the Department and the Central Bank on that point. The view at present is that availing of the existing framework, in terms of credit serving firm, is the optimum way to go but it is something that we may need to revisit.