Alan Shatter (Dublin South, Fine Gael)

I move amendment No. 2:

In page 14, line 3, after "59(3)," to insert " or 60(1),".

I thought we might have given more time to the previous amendment.

On Committee Stage I flagged my intention to introduce new provisions to address the potentially serious conflicts of interest which can arise where an auctioneer promotes an apparently attractive loan package to intending purchasers without revealing that the financial institution providing the loan has already funded the development or is prepared to do so where the property is being sold from the plans. This conflict of interest can arise, in particular, in the case of multi-unit developments where a particular financial institution has links with the developer and seeks to reduce its exposure to risk by assembling what appears to be an attractive loan package for intending purchasers. Purchasers who avail of the package may end up paying over the odds for the property. Amendment No. 8 addresses the issue by inserting a new section 60 which will ensure transparency in such cases and thereby improve consumer protection.

Subsection (1) prohibits a licensee from providing information, advice or assistance concerning a lending institution's willingness to provide a mortgage for a purchaser of residential property unless the vendor - in other words, the builder or developer - has advised the licensee whether that lending institution has provided or intends to provide a loan for the development or construction of the property. The licensee must then inform the purchaser whether the lending institution has been involved in funding the development. This provision will apply to persons who develop or build residential properties on a commercial basis, not to private persons selling their own homes. Subsection (2) provides, therefore, that the requirement in subsection (1) will not apply where the vendor is an individual acting outside his or her business. Subsection (2)(b) also allows for the making of regulations by the Minister for Justice and Equality to exclude other specified classes of vendors from the requirements set out in subsection (1). The regulation making power is a precaution in case it becomes necessary to make further exceptions to the new requirement.

It should be noted that the new requirement applies not only to actual purchasers and vendors of residential property but also to prospective purchasers and vendors because section 2(2) of the Bill defines "purchaser" as including a prospective purchaser and a "vendor" as including a prospective vendor.

Amendment No. 2 extends the definition of "improper conduct" in section 2 to include a contravention of the new disclosure requirement by a licensee. It means that a contravention may result in imposition by the authority of an appropriate sanction on the licensee.

The Minster for Finance is proposing to enhance the powers of the Central Bank to ensure the interests of consumers are further protected when mortgage credit is being provided in the Central Bank (Supervision and Enforcement) Bill 2011 which is before the House. The Central Bank is also responsible for ensuring mortgage lending in Ireland conforms with the appropriate standards and that where conflicts of interest arise, they are identified and dealt with. The Bill I have just mentioned provides for substantial penalties for financial service providers who fail to abide by the rules.

See this speech in context