Alan Farrell (Dublin North, Fine Gael) | Oireachtas source

In September 2014, there were almost 118,000 mortgages in arrears with approximately 5,000 to 10,000 being held by institutions not regulated by the Central Bank or covered by the CCMA. This alone shows why the implementation of the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 is necessary. I was not particularly pleased when this Bill was set out that we were allowing the sale of loan books to unregulated financial institutions which could rule over borrowers and mortgage holders who were repaying their loans correctly. I accept, however, this legislation is a priority and the Government will enact it as promptly as possible.

Enacting this legislation will ensure consumers retain the same protections under the Central Bank codes when their loans are sold by regulated financial service providers to firms which are currently unregulated. This will include, for example, the protection afforded to borrowers under the CCMA. It will also ensure in cases where loan books have been sold to unregulated firms that consumers have access to the Financial Services Ombudsman.

While some of those who have purchased loan books have agreed to voluntarily apply the Central Bank codes, they are under no obligation to do so.

As regards section 1 and definitions, I am pleased to see that the insertion of the definition of credit servicing firms will ensure that those managing credit agreements for relevant borrowers will be regulated, while there is also allowance for exclusion from this provision. Institutions that do not outsource credit servicing, where instead the owner of the credit is already a regulated financial service provider, will not be required to be regulated under the provisions of the Bill. That is an important factor because if we were to include those firms we would most likely end up over-burdening the industry with overly bureaucratic approaches to regulation. I would hate for us to go from a complete lack of regulation to far too much regulation. The balance has to be found and that is why I am pleased to see the provisions of this Bill.

The inclusion of transitional provisions for retail credit and credit servicing firms is important as it simply is not feasible to expect regulatory approval to be granted to credit service providers immediately after the enactment of this legislation. If transitional provision were not included it would simply be counter-productive in terms of ensuring that applications for regulatory approval are examined properly. The Bill will allow for existing retail credit and credit servicing firms to be authorised to carry out their business until such a point as the Central Bank has either granted or refused authorisation, provided that the firms have applied for authorisation from the Central Bank under section 30 no later than three months after the legislation comes into effect.

I wish to talk briefly about the code of conduct on mortgage arrears, CCMA, and the aspects of this legislation that effect the framework to which tenders must adhere. I have had a couple of instances over the past year or two where my own constituents have been in contact because they have an unregulated financial institution managing their debt. In both instances that I can recall they were mortgages. In both instances, as I outlined from the outset of my contribution, they were in fact complying with the loan agreements they had signed but additional pressure was being put on them in order to ensure that the loan was repaid faster than had originally been agreed or - most distressingly - pressure was being applied simply to sell the property and liquidate the loan book. When someone is servicing a debt and might be struggling in other areas of life, given the circumstances we all find ourselves in in this recession from which we are now emerging, the one thing they would not expect to lose if they are managing to pay the mortgage is the house. It is particularly distressing when young families are involved, of which there are many in my constituency, which is one of the youngest in the country.

In the instance to which I am referring, the constituents are in negative equity, so by selling the asset they were going to be lumbering themselves with completely unsustainable debt and no asset to place next to it. As the mortgage in question was sold to a third party, my constituent found himself outside of the CCMA and outside of the Central Bank's code. Up until recently I was not able to tell him what we were going to do about it and that is why I am pleased to see this legislation being treated as a priority.

I do not propose to use up the last minutes of my time. While I have mentioned, quite critically, that it is about time this matter was addressed by the Department, there are a number of other concerns, not just in respect of the CCMA but also regarding the treatment of debtors and the undue time - I know this does not necessarily fall under this particular Bill - for which repossession orders can hang over people. It can take years - I came across one the other day that was seven years outstanding and the individual had been struggling to meet payment agreements. The whole area of mortgage arrears should be looked at. At this stage of the recession and our emergence from it, when individuals are starting to restore their working lives, having been unemployed, or where a number of factors have led them to be unable to service the debt they have had, they are still facing uncertainty within their own four walls. They should be allowed to try to achieve what is best for their family by paying down their debt and ensuring their children are brought up in a decent loving environment. There are uncertainties over the length of time for which these foreclosure orders are in place. These issues should be looked at in tandem with Bills like this one.

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