Michael Mullins (Fine Gael) | Oireachtas source

I welcome the Minister of State, Deputy Dara Murphy, to the House for this discussion on the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015. The Bill aims to ensure borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same regulatory protections as they had before the sale, including under various Central Bank codes and the code of conduct on mortgage arrears. I share Senator Darragh O'Brien's concern and outrage at the Central Bank's report yesterday on how seven of the regulated entities are treating people in arrears and breaking the rules set by the regulators. It is disturbing that some of these banks are continuing with legal action to repossess homes despite the fact that revised deals had been agreed with struggling home owners. Other banks are withdrawing Central Bank protection for mortgage customers because they did not agree to a repayment schedule over the phone, despite the fact that banks are required to communicate a revised payment arrangement in writing, as the Central Bank has indicated.

Seven banks are involved, none of which were named. This morning I heard an interview with a representative of the Central Bank, and it is unfortunate the banks were not named and that stronger sanctions are not being imposed on them. The Central Bank's report also showed that some banks were seeking irregular payments from stricken mortgage holders on top of agreed revised payments. There were cases in which lenders continued to call borrowers directly rather than liaising with nominated third parties. Some banks were not adhering to agreed timeframes for dealing with distressed borrowers. These issues should be highlighted and put on the record of the House, as the Minister of State said.

Customers need protection when they take out credit, during the course of holding credit and when they are repaying credit. It is not equitable that some of these protections be avoided due to the regulatory provision of the entity that owns the credit. The legislation rightly seeks to ensure customers retain the protections they had before the loans were sold. Despite what Senator Darragh O'Brien said, the legislation is timely and urgent. Of the 760,000 mortgages on primary dwellings in the State, approximately 102,000 are in arrears. Thankfully, the figure has dropped significantly from 120,000 in February. This is a positive development. Deals are being done and people are returning to work and are, therefore, in a position to make the repayments. The reduction in the unemployment rate from 15% to 9.8% is contributing significantly to the fact that more people are in a position to meet their revised mortgage commitments. Of these 102,000, 5,000 to 10,000 do not enjoy the protection of the code of conduct on mortgage arrears. This is a significant number. The proposed legislation would bring peace of mind to many families.

Protection became a major issue when the Ulster Bank loan book was sold by IBRC. As public representatives, we have all heard harrowing stories from constituents about how they have been treated by lending agencies after the crash. These agencies have taken no consideration of the parts they played in getting many people into severe financial difficulties. I applaud the wonderful work being done by the Money Advice and Budgeting Service, MABS, and the credit unions and the support they have given many people who have been in great difficulty.

The Bill will extend the regulatory remit of the Central Bank and ensure the applicability of various protections for consumers of financial services. I have already referred to the code of conduct on mortgage arrears. The consumer protection code and the code of conduct for business lending to SMEs and the Financial Services Ombudsman also apply. In addition to primary dwellings, the legislation will apply to SMEs to facilitate access to credit for sustainable and productive business propositions. The consumer code is essential in this regard. While the primary purpose of the Bill is to provide protection for mortgages, many people have found themselves in great difficulty with loan sharks, properly known as regulated moneylenders, whose interest rates can be as high as 188%. I very much welcome the announcement by the Government during recent days of the micro loans scheme and I applaud the work done by the Minister of State, Deputy Kevin Humphreys.These loans will provide up to €1,000 to 40,000 low to middle-income families at an interest rate of 12% as opposed to the 188% provided by moneylenders. It will be administered through local credit unions and post offices. I welcome the fact that it will be piloted by September. Some people may have concerns that the loans will be given to people who may not be in a position to repay, but repayment is guaranteed because the payments can be taken through social welfare. There will be involvement from the Money Advice and Budgeting Service and the Society of St. Vincent de Paul to ensure people do not seek loans they cannot afford.

I welcome the fact that this will be a hassle-free process whereby moneylenders will be taken out of the loop. It should be a great boost to the credit union movement as well. I come from a town that has a strong credit union which currently has plenty of money available to loan to business and borrowers. As a Government, we need to strengthen the credit union movement to ensure it continues to play its rightful role in society and in our community, as it has always done. While a few have run into difficulty, the majority of credit unions have run their businesses in an exemplary fashion. I welcome the fact that the protections in this Bill will cover loan books sold on by the credit union movement. As the Minister of State said, it is important to ensure borrowers will have the same protections they had before their loans were sold on. I welcome the fact that the legislation is to be enacted without delay. I commend the Minister for Finance on the work he has done in this regard.