Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Most loan agreements include a clause that allows the original lender to sell the loan on to another firm. Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, if a firm who bought loans from an original lender is unregulated, then the loans must be serviced by a credit servicing firm which is authorised and regulated by the Central Bank. The legislation ensures that relevant borrowers whose loans are sold to unregulated third parties maintain the regulatory protections they had prior to the sale. Credit servicing firms must comply with all relevant requirements of financial services legislation, including the regulatory requirements set out in the Central Bank's statutory codes of conduct and regulations, including the consumer protection code 2012, the code of conduct on mortgage arrears 2013, the Central Bank (Supervision and Enforcement) Act 2013, the minimum competency code 2017 and other important legislation.

Provision 3.11 of the Central Bank's consumer protection code 2012 requires that, where a regulated lender intends to transfer all or part of its regulated activities to another regulated entity, it must provide advance notification to both the Central Bank and affected consumers. Specifically, a lender must provide a consumer with at least two months' notice before transferring all or part of its loan book covered by the code to another person, including where the transferee is an unregulated entity. Where the transferee is an unregulated entity, the code requires that the regulated lender also notify the consumer of the regulated entity that will be servicing the loan for the unregulated entity. In the event that there is a change in the credit servicing firm, the existing credit servicing firm must also notify the Central Bank and the consumer in advance, in accordance with the timelines set out under provision 3.11 of the code.

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