Seán Canney (Galway East, Independent) | Oireachtas source

On behalf of the Government, I also offer my sympathy to those affected by that tragedy.

The Government is opposing this Bill because it does nothing to strengthen consumer protection while it would cause severe damage to the mortgage market with potentially major impacts on financial stability and ultimately on the economy. The apparent logic behind Deputy Pearse Doherty's Bill is that customers whose loans are sold to private equity funds are worse off than those whose loans are not sold. The Central Bank carried out a review of the code of conduct on mortgage arrears, otherwise known as the CCMA, to ensure it remains as effective as possible and to examine this perception. The Central Bank sought the views of consumer representatives and advocates working to assist borrowers in financial difficulty, engaged with statutory bodies and industry stakeholders and conducted inspections of a retail credit firm, two credit servicing firms and a bank. It also gathered and analysed data relating to arrangements under consideration or being put in place by banks, retail credit firms and unregulated loan owners and ascertained whether they were more or less active in relation to repossessions. As the House will be aware, the Central Bank found the CCMA is working effectively and as intended in the context of the sale of loans by regulated lenders. It also found no material difference in the level of repossession activity. In fact, if we look at the number of principal dwelling house, PDH, repossessions that took place from quarter 1 to quarter 3 of 2018, out of a total of 727, banks were responsible for 644 repossessions and non-banks were responsible for 83. The Deputy's apparent logic does not stack up.

The House will recall that late last year, the Government supported and assisted Deputy Michael McGrath in bringing his Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 into force. The plight of those who find themselves in mortgage arrears is a major concern to the Government. This is demonstrated by the establishment of the State funded Abhaile scheme, which seeks to get solutions into place for those in mortgage arrears by providing them with free and independent expert advice and support tailored to their individual circumstances. This includes the identification and negotiation of solutions, and support at court if they are facing repossession proceedings. As recently as yesterday, the director of the Insolvency Service of Ireland highlighted how 95% of personal insolvency arrangements negotiated by personal insolvency practitioners result in people staying in their homes. We are making progress but we need people to engage in the process and we are doing all we can to encourage this.

The Central Bank of Ireland has significant concerns about the terms of the Bill from a consumer protection, prudential supervision and financial stability perspective. It, too, is strongly of the view that the various statutory Central Bank codes of conduct and the Consumer Protection (Regulation of Credit Servicing Firms) Acts of 2015 and 2018 provide sufficient protections to consumers whose loans are being sold. As the Minister for Finance has stated many times in this House, all mortgages or other loans which are sold or assigned to a new creditor will continue to be subject to the terms of the contract as entered into by the borrower. As a matter of contractual law, the new creditor is not able to unilaterally change the terms and conditions of that contract.

Deputy Pearse Doherty has cut and pasted, with some minor amendments, the outdated voluntary Central Bank code of practice on the transfer of mortgages. This is not how good legislation is developed and drafted and, consequently, it is no surprise that it conflicts with other more recent legislation. The voluntary code was put in place as far back as 1991. However, the legal, regulatory and consumer protection environment has changed significantly since then and it is no longer suitable for a very changed financial environment 28 years later. The Central Bank has informed the Department of Finance that it intends to consider withdrawing the code this year in light of the key protections now contained in statutory codes.

Deputy Doherty's Bill will ban the sale of any mortgage loan unless explicit written consent is given by the consumer. The level of interference proposed by the Bill in the mortgage market is, we believe, both disproportionate and potentially unconstitutional. One of the Government's key priorities is to support the normalisation-----

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