John Gilroy (Labour) | Oireachtas source

I welcome the Minister of State, my constituency colleague, to the Chamber. I also welcome Senator O'Brien's thoughtful and measured contribution, articulated in his normal coherent and clear style. However, I am a little disappointed with regard to his comments, which may surprise some people. He seemed to suggest that the legislation was constructed to satisfy the concerns of the financial industry. Let us consider some of the publications which came before the Joint Committee on Finance, Public Expenditure and Reform during pre-legislative scrutiny. They clearly outline in a transparent way most of the questions laid out by the very actors who we are seeking to regulate. The suggestion that there has been a lack of transparency in the process is probably the complete opposite to what I sense in this legislation. It has been outlined publicly in a public document and we can see the contributions and concerns of named companies, including Mars Capital, FLAC, Vivier Mortgages and the Irish Debt Securities Association. These are the agents we seek to regulate. They have all clearly laid out what they are seeking. We can compare clearly what those agents seek and what is in the Bill. If anyone can demonstrate to me that there has been a lack of transparency, they will have done a good job in the public interest.

This legislation is a welcome development. It has been the topic of much comment and concern in recent times. We have heard this articulated in the media and through consumer organisations. The sale of loans has a tendency to create uncertainty and concern among borrowers. While it is commonplace in other countries, it is a relatively recent phenomenon in Ireland. Up to now, borrowers in Ireland have had a reasonable expectation that they would continue to deal with the people who lent them money, that is to say, the financial institutions from which they borrowed the money. Our domestic lenders are bound by the Central Bank of Ireland codes but up to now the so-called unregulated financial institutions have not been. While borrowers from unregulated financial institutions have access to the courts, up to now they have not had access to the Financial Services Ombudsman, whose role is central in resolving disputes and complaints between customers and the lending institutions. Many of the unregulated financial institutions have agreed to accept the voluntary code of the Central Bank of Ireland. This voluntary code is a form of compliance, although it is not enforceable.

I suggest that relying on the goodwill of international and mobile investors is not the most prudent course of action. We have seen a stark example of this in the past week with the owners of Clerys. They have strictly abided by the letter of company law but have shocked everyone with their ruthless application and disregard of the spirit of that law. This is probably the first time we have seen international asset strippers arriving into the country to make a pure clear profit only to be gone as quickly as they came while using our laws to their advantage. It is not the most prudent course of action to rely on the voluntary goodwill of financial institutions. The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 gives statutory protection to customers and will prevent this type of asset stripping. It will go a long way towards reassuring customers that their loans and the conditions under which the loans were borrowed will retain the protection they have enjoyed up to that point.

Before the economic implosion on a global scale we saw how the financial markets in the Americas, and the United States in particular, had securitised or bundled up various financial products, for example, life insurance policies, sub-prime mortgages and other financial instruments and derivatives, before selling them on in the secondary market. In many ways this was the cause of the great crisis that has visited us in the past decade. Does this Bill speak to any of those concerns in respect of financial institutions which might be tempted to securitise other products, including some of our non-performing mortgages in arrears?

My second question for the Minister relates to credit union loan books being sold. I was unaware of this practice or if I was, I had not given it much thought. I do not imagine many people in the country are aware of this. Will the Minister of State inform the House how prevalent is this practice in the country? Is it something we are likely to see more of?

Senator O'Brien made a reasonable point. He asked why people in mortgage arrears are not allowed to buy their mortgages, while multinational companies are allowed. Is this anything to do with the fact that people who find their mortgages being sold on are, by definition, in arrears and do not have access to capital to buy them? Where can these people raise the capital if their primary asset is in trouble already? Is that one of the reasons, or is it simply utilitarianism, that is to say, it is simply too difficult to administer? If this were the case, it would be unacceptable. Perhaps the Minister of State might comment on those points.

We look forward to discussing the sections of the Bill in detail. I presume the Minister, Deputy Noonan, will come to the House when the Bill is before us again. I look forward to further engagement. I also look forward to hearing details of the Opposition amendments to strengthen the provisions. Senator O'Brien, in particular, has referred to this. We look forward to discussing those at length at that Stage.