Pearse Doherty (Donegal, Sinn Fein)
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41. To ask the Minister for Finance if he will instruct the State backed banks including NAMA not to sell loan books to vulture funds; and if he will make a statement on the matter. [10017/17]

Pearse Doherty (Donegal, Sinn Fein)
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This is a straightforward question on the sale of loan portfolios by banks and the National Asset Management Agency, NAMA, to vulture funds. On my question on Project Eagle which was overruled, for the record, the Department flagged the question for disqualification before the Ceann Comhairle ruled on it.

This question asks the Minister to instruct banks and NAMA not to sell loan books to vulture funds, which are unregulated entities. In addition, none of the intermediate companies or middle persons, as they could be described, which service loans on behalf of the vulture funds, has been authorised by the Central Bank. In recent years, customers have been thrown to the wolves while vulture funds have been reaping major tax benefits from the purchase of loan books.

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, non-performing loans remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism, SSM. In Ireland, significant progress has been made across the banking sector in reducing the level of non-performing loans since the financial crisis. Despite this progress, the level of such loans in the banking sector remains well above the European average. Hence, the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge. This challenge will have to be met irrespective of whether the State has a shareholding in the bank concerned.

As the Deputy knows, the relationship between the Minister for Finance and banks in which the State is a shareholder is governed by relationship frameworks, which can be found on my Department's website. In accordance with these relationship frameworks, the Minister for Finance has no direct function in commercial decisions made by the banks and these decisions are the responsibility of the board and management of the relevant institution. Notwithstanding the State's shareholdings in the banks, I must ensure the banks are run on a commercial, cost-effective and independent basis to protect their value as an asset to the State.

Similarly, I do not have a role in the National Asset Management Agency's commercial decisions. Under the National Asset Management Agency Act 2009, the agency has a well-established mandate to achieve the best possible return to the State by protecting, enhancing where possible, and ultimately realising the value of assets it has acquired. To achieve the maximum return to the taxpayer, NAMA was established as an independent commercial body under the direction of an independent board. I highlight for the Deputy that NAMA is operating within its mandate and progressing its objectives.

I should also highlight that there are substantial protections in place for customers in the event that a loan is sold to a third party. The Consumer Protection Act 2015 was designed to protect borrowers in this circumstance. Under the Act, purchasers of loan books must either be regulated by the Central Bank or the loans must be serviced by a credit servicing firm which is regulated by the Central Bank.

Additional information not given on the floor of the House

Under the Consumer Protection Act 2015, relevant borrowers whose loans are sold to third parties maintain the same regulatory protections they had prior to the sale, including under the various statutory codes, such as the consumer protection code and the code of conduct on mortgage arrears, issued by the Central Bank of Ireland and the Central Bank Act 2013 Regulations 2015, which came into operation on 1 July 2016. The sale of a loan does not change the terms of the contract or the borrower's rights and obligations under the original contract.

My Department will continue to keep all relevant legislation under review to ensure borrowers whose loans have been sold are properly protected and do not lose any protections which they previously enjoyed. In addition, the Department of Finance expects that the Central Bank, as regulator of credit servicing firms, will be vigilant in this area and raise any specific instances where they have found consumers have not had their protections upheld.

Pearse Doherty (Donegal, Sinn Fein)
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While the Minister's response may sound great, the reality is that the credit servicing firms are only regulated or authorised by the Central Bank because they were operating in Ireland before the relevant legislation was enacted. Not one of these firms has been authorised by the Central Bank under the new standards. This means that not only are the vulture funds not regulated, but none of the credit servicing firms has been regulated under the new standards or received approval from the Central Bank under these standards. Some 18 months after the enactment of the legislation, the reason these firms are defined as being regulated is that the so-called passporting section of the Act deemed them all to be regulated until such time as they met the new standards.

The Minister sounded like Pontius Pilate as he washed his hands of this issue. Tens of thousands of home owners' loans have been sold to vulture funds. The Minister's statement that he does not have a commercial relationship with the banks and that the relationship framework precludes him from having such a relationship is not true.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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The Deputy's time has concluded.

Pearse Doherty (Donegal, Sinn Fein)
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According to documents we received from NAMA under freedom of information legislation, the Minister's position was that NAMA should not involve itself in housing if it meant the agency would repay its debts more slowly.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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Please, Deputy.

Pearse Doherty (Donegal, Sinn Fein)
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The Minister also gave other directions to NAMA.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I ask the Deputy to obey the Chair.

Pearse Doherty (Donegal, Sinn Fein)
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We can see from the minutes of meetings between the Minister and the banks that he engaged on issues such as tracker mortgages and variable interest rates.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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The Deputy must listen to the Chair.

Pearse Doherty (Donegal, Sinn Fein)
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Will he continue to sit back while banks continue to sell loans to vulture funds?

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I must point out that the rules of the House are set down by Members and implemented by the Business Committee. Every time a speaker exceeds the allotted time during questions, he or she ensures that some of his or her colleagues' questions will not be reached. This is unfair and I appeal to Members to abide by the rules. A Deputy has 30 seconds to introduce a question and the Minister two minutes to reply, after which both the Deputy and Minister may each make two further contributions of one minute. I ask all Deputies to stick to the rules the House has put in place.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy is incorrect in his assertion that the Consumer Protection Act is ineffective. Under the Consumer Protection Act 2015, relevant borrowers whose loans are sold to third parties maintain the same regulatory protections they had prior to the sale, including under the various statutory codes, such as the consumer protection code and the code of conduct on mortgage arrears, issued by the Central Bank of Ireland and the Central Bank Act 2013 Regulations 2015, which came into operation on 1 July 2016. The sale of a loan does not change the terms of the contract or the borrower's rights and obligations under the original contract.

To respond briefly to Deputy Burton's question as part of my response to Deputy Doherty, Deputy Burton effectively asked why the banks did not cut deals with more people with impaired loans. The investment funds that buy impaired loans are in the business of cutting deals and do so frequently. I watched an RTE programme on the purchase of loans by investment funds and speaking during a panel discussion at the end of the programme, a very well-known individual, who is highly regarded by persons with impaired mortgages, stated it was his experience that it was much easier to deal with vulture funds to secure a reduction in the amount owed than it was to deal with the banks. The obvious reason is that if one can buy at a discount, one has much more head room to cut a deal.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I ask Deputy Doherty to give way to allow Deputy Mick Wallace to make a quick comment.

Mick Wallace (Wexford, Independent)
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We have sold a large slice of Ireland to vulture funds for a fraction of its value. Cerberus alone has bought par value loans of more than €25 billion for a fraction of what they are worth and it has wreaked havoc. How can the Minister claim he is not responsible for anything the National Asset Management Agency does? To whom is NAMA responsible, if not the Minister for Finance? Is the Minister telling the House he does not have any influence or control over what NAMA does? It beggars belief that no one has taken the agency to task in recent years. If the truth is told and a proper investigation carried out, I reckon we will find that NAMA has cost the State approximately €20 billion as a result of the manner in which it has operated.

Pearse Doherty (Donegal, Sinn Fein)
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Deputy Wallace has articulated the real point, which is one that was clearly presented to the public in an excellent RTE documentary. Not only was Ireland for sale but it was for sale tax-free as a result of policies pursued by this Government and its predecessor.

In fairness, the Minister responded to me on the section 110 issue and he outlined that it was the Fianna Fáil Government that engineered that into the NAMA agenda before NAMA was even established. However, he is still going to sit back and allow the banks to sell people's homes to vulture funds.

There is already a huge amount of damage done in this regard. It is reported that between 46,000 and 90,000 mortgages are to be sold. The idea that the Minister for Finance has no responsibility for or role in this regard is not credible. The Minister may be able to fool the people who have not studied this matter but we know the directions he has issued to NAMA. We know, for example, that he directed NAMA to hold the IBRC loan and that he has given similar directions on numerous other occasions. The Minister can have a commercial role in regard to NAMA and he can issue directions to NAMA but he refuses to do so.

Michael Noonan (Limerick City, Fine Gael)
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The strength of Deputy Doherty's advocacy and the fact that he puts information that is incorrect on the record does not make his arguments correct. I have always said that I have certain responsibilities for NAMA. I have those responsibilities for NAMA which are enshrined in the NAMA Act as enacted by the Houses of the Oireachtas. That legislation provides a role for the Minister for Finance but it does not give him or her the power to interfere in commercial decisions.

Deputy Wallace has made assertions today along the lines of those he has made on several previous occasions. I think he has a problem with Cerberus and that he should declare an interest-----

Mick Wallace (Wexford, Independent)
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I have a lot of problems with it.

Michael Noonan (Limerick City, Fine Gael)
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I know. I think the Deputy should declare an interest rather than act here as a neutral observer commenting for the public good. Let us be fair. The Deputy is a great man to make assertions under privilege.

Mick Wallace (Wexford, Independent)
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I have had plenty to say about Cerberus outside too.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy is a great man to make assertions under privilege but it is true that he has an interest and he should declare that interest and then we would all know where we stand.

Mick Wallace (Wexford, Independent)
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There are few people around who will stand up to it.

Clare Daly (Dublin Fingal, Independent)
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The Minister is fond of making points under privilege himself that he would not utter outside this House. However, the truth will out.