Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank all Deputies for their contributions to what has been a constructive debate. I am fully aware of the concern among mortgage account holders that they could lose the protection of the Central Bank's code of conduct on mortgage arrears. The Sale of Loan Books to Unregulated Third Parties Bill which is listed in the Government legislative programme was always intended to address concerns surrounding the continued applicability of the code after the sale of loan books to unregulated entities. My officials have examined the complexities of this issue with their colleagues in the Central Bank and the Attorney General's office. This is a complex issue. Therefore, I am not in a position to say when the draft legislation will be ready for submission to the Government. I do not want to bring forward unworkable legislation or legislation that will have unintended consequences for mortgage holders.

The proposed Bill that we have discussed tonight and last night would create an unenforceable obligation on the purchaser in respect of the CCMA and the Central Bank and the Financial Services Ombudsman would lack the power to impose sanctions. Depending on the outcome of the examination of the issue, it may be that we can amend Deputy Michael McGrath's Bill or it may be more appropriate to introduce a new Bill. I will not prejudge the outcome of the detailed examination of the issue, as that would not be helpful to the consumers concerned. I do not accept that legislation must be in place before the IBRC loan books are sold. Following the meeting of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform last week, the remaining bidders for the IBRC loan books have committed to abide by the Central Bank's code of conduct on mortgage arrears on a voluntary basis. This is similar to the commitment given by Apollo which is not regulated. No specific difficulties have been raised about the ongoing operations of Apollo.

As I have stated on numerous occasions, it is better for legislation to cover all mortgage loan books owned by unregulated entities than to interfere with ongoing or other particular sales processes. Even the perceived interference with a sales process opens up the taxpayer to significant financial risk. The Government's approach of legislating on the basis of protecting consumers has the same outcome for the consumer and lower risk to the taxpayer.

I wish to address some of the concerns raised by Deputies in last night's debate about mortgage holders not being able to bid for loans and clarify the matter. The special liquidator has said no IBRC borrowers are being provided with an exclusive opportunity to buy back their loans at a discount. All loan sales processes have been undertaken as competitive bidding processes where any qualifying bidder may make a bid for the loans. Anyone buying back loans did so after such a competitive process where the full details of the loans were available to all potential buyers. Such a process raises considerable data protection issues in respect of individual mortgage customers.

I fully understand the frustration of some customers owing to not being in a position to bid for their loans. The special liquidators, however, must decide what process is most likely to achieve best value on an aggregate basis. To this end, the special liquidators have received independent professional advice that states the maximum value will be obtained for the residential mortgage books by selling them as portfolios of loans. I also understand mortgage holders may be concerned that their variable interest rate will be affected by the sale of a loan book to an unregulated entity. The terms and conditions of a mortgage continue to apply on the sale of the mortgage and the lender must have discretion with regard to the interest rate charged in line with these terms and conditions. As Minister for Finance, I do not regulate interest rates and this situation applies to both regulated entities such as the banks and unregulated entities.

The Government is committed to bringing forward legislation to protect mortgage holders and I look forward to working with Deputy Michael McGrath and the other members of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform to achieve the best solution for consumers. I feel obliged to caution that it is not helpful to generate unwarranted fears among persons who hold mortgages which may or may not be sold, either with IBRC or other banks. That serves no purpose.

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