Éamon Ó Cuív (Galway West, Fianna Fail)
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10. To ask the Minister for Finance the reason he does not propose extending the consumer protection and recourse to the Financial Ombudsman to the mortgage holders who are at present with Irish Bank Resolution Corporation in the event of the mortgage book of IBRC being sold to an entity outside this jurisdiction; and if he will make a statement on the matter. [15985/14]

Éamon Ó Cuív (Galway West, Fianna Fail)
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I understand that two-thirds of the mortgage loan book of IBRC has been sold, or has been announced as having been sold. This leaves many customers of what was the Irish Nationwide Building Society without the consumer protection and recourse to the Financial Ombudsman they enjoyed previously. What action is the Minister taking to ensure this protection is afforded to these mortgage holders?

Michael Noonan (Limerick City, Fine Gael)
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The Government has always been clear that we would ensure mortgage holders retained the protection of the CCMA. We also made clear that we fully expected that any purchaser of the IBRC mortgage portfolio would service the loan books in accordance with the CCMA. This expectation has been met in recent days with the conclusion of the sale of the IBRC mortgage portfolio. The two purchasers of the residential mortgage loans, Loanstar and Oaktree, have both committed to servicing these books in accordance with the terms of the Central Bank's code of conduct on mortgage arrears, CCMA.

The Department's legislative programme includes the sale of loan books to unregulated third parties Bill, which will address concerns surrounding the continued applicability of the Central Bank's CCMA after loan books are sold to unregulated entities. In preparation for this legislation, my officials have been considering how best to ensure that the protections under the CCMA and other codes continue to apply when a loan book is sold to an unregulated entity. The complexities of this issue have been discussed at meetings with officials in the Central Bank, and the Attorney General's office has been kept informed of progress. Draft heads of the legislation have been sent to the Central Bank for its consideration in advance of more detailed engagement with the Attorney General's office. I do not consider it appropriate to discuss the details of these draft heads now, because we are at a very preliminary stage and the heads have not been cleared from a legal viewpoint. However, I hope that whatever changes are made will also include giving these mortgage holders access to the Financial Services Ombudsman.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It was difficult to catch everything the Minister said, but am I right in thinking that the legal position is that the arrangements the Minister has made have no legal status and are totally unenforceable and that this is a case of what might be called light-touch regulation, whereby there is some kind of moral understanding, but if a dispute arises people have no recourse to the mechanisms available to those who are covered or to the recourse they had before the loan books were sold?

Michael Noonan (Limerick City, Fine Gael)
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I do not think that is correct. It is not my job to give out legal advice, but I believe that when there is a serious agreement between two people, even if they only shake hands on it, there is a contract. Some of the guarantees we saw before the sale were transmitted by way of e-mail and in written form. Therefore, I work under the assumption that there is a contractual obligation.

Lone Star and Oaktree are reputable organisations and I do not think they would welsh on their commitments. There is a tranche of loans which may be transferred to NAMA. We also have guarantees from NAMA that it will implement all of the protocols agreed with the Central Bank. To make doubly sure, I am preparing legislation. As I described, although we have sent the heads of the Bill to the Central Bank and are consulting the Attorney General's office, we are at a preliminary stage. There are complex issues which will take time to work out. We will work through them and underpin the voluntary agreements made with legislation in due course.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The Minister has some arrangement in place, but if a client is in dispute with the financial institution that has bought his or her loan, where does he or she go to enforce the rights he or she would have been able to enforce if the institution was covered by the legislation as a covered institution? Is all of this not putting the cart before the horse? Why did the Minister not introduce the legislation first and make the sale second, rather than making the sale first, leaving people vulnerable and then trying to bring forward the legislation retrospectively? They are two specific and separate questions.

Michael Noonan (Limerick City, Fine Gael)
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I did not introduce the legislation first because the sale was moving along a tight timeline and the legislation was complex. It will take some time to bring it to a conclusion. The other reason is that we had guarantees from the potential purchasers that they would honour the codes of practice set down by the Central Bank. They are reputable organisations and there is no reason to doubt them. Where other loan books have been sold to other organisations, nobody has run into any difficulty with the codes of practice. While the sales were made some time ago, nobody has come forward to say there was a lack of compliance with the codes of practice.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The Minister did not answer my first question.

Pearse Doherty (Donegal South West, Sinn Fein)
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Can the Minister inform us that the heads of the Bill provide for the retrospective nature of the legislation in order that it will not apply just to IBRC mortgages but also to the others sold by previous institutions? I have said we will be generous in facilitating the passage of the legislation to protect mortgage holders. What is its legal standing? Was it a spit in the hand and a firm handshake between somebody from the Central Bank, Lone Star and the other companies that bought these loans? Was it agreed to by e-mail? The Minister seems to suggest that although the loans of thousands of mortgage holders were sold a number of weeks ago, he is still completely in the dark as to whether there is a contractual agreement or it is just somebody in an office sending an e-mail to the Central Bank with a nod and a wink agreeing that the institutions will comply and telling the Central Bank not to worry. Is the Minister not concerned whatsoever? Should he not take some interest in this issue and find out if the e-mail correspondence which seems to give the only assurance that they will comply with the CCMA is of a contractual nature?

Michael Noonan (Limerick City, Fine Gael)
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Although I know it is the job of Opposition Deputies to misconstrue as far as possible the views of Ministers, I said none of the things he has accused me of saying. He asked me about the heads of the Bill. As I said in the original answer, because the heads have not yet been legally proofed, I am not in a position to discuss them with him.

Pearse Doherty (Donegal South West, Sinn Fein)
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The Minister is in a position to tell me what is his intention.

Michael Noonan (Limerick City, Fine Gael)
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Let me finish. My intention is to legislate in order that the code of practice that applies to regulated organisations which have mortgage books will also apply to organisations outside the jurisdiction which are not regulated by the Central Bank.

Pearse Doherty (Donegal South West, Sinn Fein)
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I asked if the legislation would be retrospective.

Michael Noonan (Limerick City, Fine Gael)
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It is the same thing.