Thursday, 14 February 2019
Ceisteanna - Questions - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
Some of us are doing our best to defeat the vulture culture at home, but there is a danger that this EU directive will take the disastrous Irish experience and enshrine it as best practice throughout the European Union. My Sinn Féin colleague, Matt Carthy, MEP, has been ringing the alarm bells on this throughout Europe, but where does the Irish Government stand on the European Commission's proposal regarding the non-performing loans directive?
As the Deputy and Mr. Carthy, MEP, will be aware, the legislative package of the Commission and its objectives seek ways in which we can create a safer and more stable and resilient financial sector. Part of this was the implementation of revised capital requirements for banks under the capital requirements directive and the capital requirements regulation. This aspect of the package of measures, known as CRD IV, includes stronger prudential requirements for banks, ensuring they are adequately capitalised and less susceptible to liquidity issues.
Another part was the proposed directive on credit servicers, credit purchasers and the recovery of collateral.
It now appears likely that part of the directive dealing with collateral called "advanced extrajudicial collateral enforcement" will be separated out from the directive and considered at a later point.
The remaining part of the directive under active consideration would impose authorisation requirements on credit servicers similar to those imposed by the consumer protection Act 2015. It also provides that credit purchasers must appoint an authorised credit servicer to service their credit. Unlike the consumer protection Act 2018, it does not require such credit purchasers to be regulated or authorised by the Central Bank.
The directive is being considered at working group level in Brussels and final agreement has not been reached. My officials will represent our legislative stance, whereby the owners of credit, as well as the credit servicing firms, are regulated.
It is fair to say we did not agree with the directive as initially drafted and have sought multiple amendments to it. As we are further down the road with this experience, we are now working hard to secure changes to the proposed text.
The issue of requiring the banks to hold additional capital for losses they may incur is one we support, but I wish to focus on the pro-vulture part of this directive. The best option for the Irish people - indeed, working people throughout Europe - is to throw out this proposal. Failing that, massive change is needed to ensure that any type of consumer protection, or indeed human rights protection, is weaved into it. The proposal represents the EU at its worst. It is simply about the needs of capital, and to hell with the ordinary people. This Parliament supported my No Consent, No Sale Bill, which represents an approach that has consumer protection, not bank protection, at its heart, its core. In Brussels speak, the directive is about establishing a second market for loan sales. In normal speak, this means making it easier and even more attractive for banks to sell mortgages or their loans to the vultures. As Mr. Carthy, MEP, has said, the directive amounts to a second bailout and is the wrong policy.
There is also a question of sovereignty because the directive throws a pro-vulture blanket across Europe. The Minister may be comfortable with this but we in Sinn Féin will resist it.
Finally, and I want the Minister's specific views on this, the proposal will also empower banks to seize customers' collateral through out-of-court recovery mechanisms and will result in borrowers, including mortgage holders, being pursued more aggressively by vulture funds and debt collectors. Is the Minister looking to oppose or seriously amend this?
The only culture I am interested in seeing develop throughout Europe is one that builds on what we have had in Ireland, where we have seen really important and significant progress in dealing with the issues of mortgage arrears and distressed debt, taking account of the huge trauma and difficulty it causes to citizens. Of course, what I will not hear from Deputy Doherty is the fact that we now approach the 20th quarter in which we have seen a decline in mortgage arrears. I will not hear from him that we now have another decrease in the number of accounts that are in arrears, including in long-term arrears.
As for this text and the debate that has taken place on it in ECOFIN and the Eurogroup to date, I have made clear that we need to be very careful that we do not put in place a text that leads to consequences that could be very difficult for those who are in very distressed situations. I am well aware of the experiences we have had in Ireland of this. I have been in the middle of this for the past 18 months and I am working hard through my officials to amend this text to look to get it to a better place.
It is very difficult to take the Minister seriously when he says he is defending Ireland's interest when it comes to this issue because we know from past and very recent experience, and we know today, Valentine's Day, that the Minister is a vulture lover, as indeed are the rest of his Cabinet. He has sat on his hands and facilitated banks in which the Department has the majority shareholding selling off performing loans to the vultures and has thrown them to the mercy of those vultures.
The Minister did not answer the question I asked him. Going into the detail of this package of directives, there is, for example, a proposal for out-of-court recovery mechanisms. This means that vultures would in future be allowed to bypass the court system to repossess more aggressively the homes and properties of those who fall into arrears or who are finding it difficult to pay the entire sums of their mortgages at that point in time. This Minister and this Government have standing in this regard. We have heard previous Ministers say they believe vultures are a good thing. They opposed my legislation, which, thankfully, has passed Second Stage in the Dáil and is now on Committee Stage, and which will allow borrowers to determine themselves whether they support the sale of their loans to the vultures.
Will the Minister answer the specific question I put to him earlier? Is he opposed to the idea of out-of-court recovery mechanisms for vultures to secure collateral without going through the courts system? Is the Government seeking amendments to this? Will the Minister oppose it at European level or continue in his approach as a vulture lover?
Of all the Deputies I thought were going to mention Valentine's Day to me, I did not have Deputy Doherty at the top of the list. His card has not arrived to me yet, nor indeed has a card from anyone else, but the day is but young.
As for all the charges the Deputy has put to me, I point back to the balance we have sought to secure, which the Deputy will never acknowledge, of trying to protect the interest of homeowners in significant difficulty; the fact that we have made great progress in doing this in recent years; the work of the Insolvency Service of Ireland; and the effect of the personal insolvency legislation we have in place. We will never hear any acknowledgement of this from Deputy Doherty. I will acknowledge the concerns or worries that are there but the Deputy will never acknowledge progress that has been made.
To respond to the specific questions the Deputy put to me, I will not outline now what my negotiation approach will be in respect of this text. I am mindful, however, of the points the Deputy has raised because I have seen the difficulties this issue has created in Ireland and I do not want to see the worst difficulties we have faced develop elsewhere. I am very cautious about non-court or non-legal ways of dealing with these issues becoming the norm.