Seanad debates

Tuesday, 18 December 2018

Consumer Protection (Regulation of Credit Servicing Firms) Bill 2018: Committee Stage

 

12:30 pm

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael) | Oireachtas source

Nobody questions anybody's bona fides on this issue. The question is fair. The Bill was not designed to regulate private equity funds. Currently regulated by law are the agents, the credit-servicing firms. Deputy Michael McGrath presented this Bill and the Department of Finance and others participated in a very collegiate way to try to do the best we can for these structures.

We have concluded that anybody who is participating is regulated. A private equity fund that wants its money out in four years is regulated. It is as simple as that. It is one direction; they are now regulated. Investors, who have others investing their money for them in a securitisation structure and have no further input apart from investing, are not regulated and will not be regulated. They were not meant to be regulated.

It is not a question of a gaping hole. It is a question of it doing what we wanted it to do, which was to regulate private equity funds that stand above the credit-servicing firm, which is the agent for the private equity fund and takes instruction from the fund and they are not passive. Everything else that is passive - any other investor - is not regulated.

I am advising Seanad Éireann that proceeding with this amendment would be a mistake. There are other unintended consequences. I will give another example. If we require a person who is an investor in a securitisation structure to be regulated, he or she may not be able to invest not just here but in other areas of securitisation because he or she may not have an entity here but may simply provide capital to make an investment.If this is passed and if they are regulated, they will need staff and structures here, and they will need their entity based here, which many of them do not do and have no intention of doing. That is the unintended consequence. I accept the Senator's bona fides in questioning the matter.

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