Seán Kyne (Galway West, Fine Gael) | Oireachtas source

The Government is often criticised for a failure to reform. I welcome the use in recent years of the pre-legislative scrutiny process which allows for legislation to be discussed, debated and examined. The procedure enhances legislation, as is clear from the Bill before us. Its only downside is that it extends the legislative process.

The Department initiated consultation on this Bill last summer. It received 19 submissions from various organisations, including civil society groups, and officials subsequently met some of them to clarify issues they had raised. The changes implemented as a result of the consultation demonstrate the importance of the pre-legislative scrutiny process. Officials also met British officials who had worked on similar issues a short time previously. They also discussed the proposed legislation with members of the Joint Committee on Finance, Public Expenditure and Reform.

The Bill provides that Central Bank codes of conduct will continue to apply and borrowers will continue to have access to the Financial Services Ombudsman after their loans are sold to unregulated entities. They will have the same protection under the Central Bank code of conduct on mortgage arrears as they had before their loans were sold. As officials pointed out at the joint committee, the simple objective of the Bill is to ensure that, where loans are sold by a regulated entity to an unregulated entity, the regulatory protection that applied prior to the sale will continue to apply.

The Bill also regulates credit servicing and ensures borrowers can complain to the Financial Services Ombudsman. All loans to consumers and small and medium enterprises are covered by the provisions. The Central Bank consumer protection code limits the number of communications a bank may have with consumers and the number of personal visits it may make. It also deals with compliance in the case of outsourced activity. I am aware of an individual who took out significant loans with a bank, partly because he was pressurised by the bank to do so. I do not propose to go into detail, other than to state that the level of contact by the bank and the comments made by its staff to the individual in question have caused him serious stress. The pressure exerted by banks on some individuals with substantial loans is a cause of grave concern as it is having a serious impact on people's state of mind and health.

Small and medium size enterprises will also enjoy protection under the business lending code regarding arrears and complaints resolution. Furthermore, in the event that credit union loan books are sold, borrowers will be afforded the same protection as other borrowers. This is a welcome provision.

The Government has listened and the Minister has acted on foot of concerns that have been raised. I received an e-mail some time ago from a person pointing out that he and many thousands of other borrowers with IBRC have loans that are repayable on demand because this was a condition of the loan. This means that a bank acquiring these loans can force a borrower to sell the property at whatever price the bank decides, thus making the borrower either bankrupt or forcing him or her to suffer a loss on an investment. The individual in question stated that as loans purchased by foreign banks or venture capitalists were not governed by the Central Bank of Ireland, the new creditor would be able to do as it wished with them. I am sure Deputies have been contacted by many other people who were in similar circumstances and will welcome this legislation.

As a member of the Joint Committee on Jobs, Enterprise and Innovation, I welcome the initiatives in respect of small and medium size enterprises. We often hear about the importance of access to finance. Equally important, however, are the terms and conditions that apply to such finance. Where leeway is shown to businesses, it can sometimes mean the difference between saving jobs and job losses. Local bank managers play an important role as they know their clientele and are familiar with the particular circumstances of customers. Outside bodies will not show any regard for such issues as they will not know a customer's business or employees and will view him or her as nothing more than a number. Regulation is, therefore, important.

The Financial Services Ombudsman, FSO, has stated that consumers dealing with unregulated entities "experience considerable frustration and a sense of unfairness when the regulatory protection of access to the FSO is denied to them by virtue of the regulatory status of the financial services provider." I welcome the measure allowing such consumers to avail of the services provided by the Financial Services Ombudsman. I welcome this badly needed Bill and the consultation that took place in its preparation.

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