Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I thank Deputy Michael McGrath for bringing forward the Bill, which will ensure that owners of loan books will have to be authorised and regulated by the Central Bank of Ireland. I am representing the Minister for Finance, Deputy Donohoe, who is at ECOFIN today.

This is an important piece of legislation and we need to be careful that it does not have unintended consequences. I acknowledge the interaction between the Department, the Central Bank and the members opposite.

The Government was committed to supporting the Bill on Second Stage and followed through on the commitment. I acknowledge the support of the Office of the Parliamentary Counsel in developing the amendments proposed. The 2015 legislation was complex and this legislation involved the same level of complexity. Trying to capture what was intended without leaving loopholes which could be exploited and without going beyond what was intended is a tricky operation.

It is helpful that the Bill, as amended on Committee Stage, will be published and available for consideration by stakeholders in the market over the summer recess. We will return to it on Report Stage in the autumn and this will give us the opportunity to revisit some of the technical details. Specifically, we may bring forward Report Stage amendments following engagement with the Central Bank on the appropriate regulatory regime. That said, the amendments achieve what we and Deputy Michael McGrath have set out to achieve and I look forward to the debate.

In response to Deputy Pearse Doherty's question, the main difference between authorisation as a retail credit firm and authorisation as a credit serving firm is that retail credit firms are required to submit details of their credit risk strategy, their credit policy, their credit control policy, forbearance restructuring, etc., provisioning and bad debts policy to the Central Bank. The bank also imposes a requirement on retail credit firms to communicate with its management body in respect of any deviations from these strategy. A retail credit firm is also required to ensure that any significant deviations from the credit risk strategy, credit policy, credit control policy and provisioning policy should be communicated to its management body in accordance with the reporting arrangements set out in the credit policy. The credit servicing firm authorisation requirements require credit firms to have professional indemnity and insurance, to notify the Central Bank in advance of taking on a new loan portfolio, and provide for requirements around a credit firm's relationship with the loan owner.

The European Commission has launched a proposal for a European directive on the authorisation of credit servicers. The proposed directive provides that credit servicers authorised in a member state can provide their service across the EU provided they are in compliance with the directive. Member states would be required to have an authorisation regime in place for credit servicing firms under the proposed directive. The proposed directive would require that loan purchasers are not subject to additional requirements. This is not compatible with the Private Members' Bill.

The benefits to regulating firms as credit serving firms include the following - continuing the existing credit servicing regime is of benefit to existing credit servicing firms; it would allow existing credit servicing firms to passport to other EU countries; it is more stable from a legislative viewpoint; it is more likely to be consistent with the new EU regime; and, authorising loan owners as retail credit firms would not improve the consumer protections that would be available to borrowers - there would be the same protections as available via authorisation as a credit servicing firm.