Mr. Maurice Crowley:

Not that we would ever admit to banks' winning an argument such as that. I take the Deputy's point on the borrower-lender relationship because that is where it all starts. On one level, we are not here to protect the purchasers of those loan books. We do have a concern, as we said at the start, that if a level of regulation is imposed on the purchasers of these books they may be deterred from purchasing these books going forward and that would have practical and commercial implications for regulated banks which are trying to deleverage and strengthen their capital bases. In the context of purchasers of loan books, our concern is from the point of view of not deterring them, it is not necessarily from protecting them from regulation. The concern is twofold, if there is regulation on the new purchasers it may deter them from making a purchase in the first instance. Our other concern is more practical. I revert to something I said earlier. In drafting the original legislation the Department sought to draw a distinction between securitisation special purpose vehicles, SSPVs, because many of them are used by banks in this country to sell covered bonds and securitise their mortgage in order to bring more liquidity to their balance sheets, and SPV, which we would welcome. The danger and the practical concern we would have for the borrower is that if the focus of the regulation is on the SPV, it is a legal entity here but it is no substance, what is one actually regulating? What recourse does one have against that SPV which is just the holder of a loan book? I do not know but I am not sure there is much else on the balance sheet of that SPV.

I would worry about the substance of that SPV in terms of regulation and the ability to pursue and to sanction. For us, the focus on the loan servicer was intended to be a more effective way of focusing in on a group of entities that could clearly be regulated and have significant substance in this country. All of these loan servicers - I draw a distinction between the provident services - have a substantial presence in this country in terms of employment. They also have substantial reputation concerns. These are significant companies. Certus is Irish based but Pepper, Capital and HML are worldwide companies and will not put their reputation at risk. For those reasons, they are quite comfortable with the notion of being regulated because they have a reputation to protect both in this market and elsewhere.