Tim Lombard (Fine Gael)
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I thank the Minister of State was more than welcome to the Chamber. I am raising this issue about the vulture funds and the regulation in place to ensure appropriate dialogue is in place between both the client and the vulture fund itself. I raised this issue on the back of meeting several people in west Cork in the past two to three weeks. O'Donovan's Hotel in Clonakilty is probably the one that is being well-talked about at the moment. This is a family hotel of seven generation standing being hounded out of business by a vulture fund. The hotel has put significant offers on the table and it cannot get a response.

It is not just O'Donovan's Hotel in Clonakilty. I am dealing with farmers from the Bandon area and two different shopkeepers in Kinsale and it is like the wild west at the moment. The vulture funds have come into town, have looked at portfolios that have value and want to appoint a receiver to close up shop. What is happening is completely chaotic.

AIB and its involvement in the scandal also has to be mentioned. It sold the majority of these loans, moved them on for very small money and did its best to wash its hands of clients that were with the bank for generations.

There is one vulture fund in particular called Everyday Finance DAC, about which I have the issue at the moment. We cannot deal or make contact with it here. It is working to a law unto itself and the Central Bank needs to do appropriate work to ensure these funds are regulated appropriately.

We are looking at companies in a scenario where receivers are being appointed-----

Jerry Buttimer (Fine Gael)
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Iarraim ar an Seanadóir a bheith cúramach, lena thoil. The Senators should be careful of making charges against individuals or organisations, and to protect himself also.

Tim Lombard (Fine Gael)
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Absolutely, Chair, and I thank you.

To clarify, the vulture fund epidemic in west Cork needs to be addressed. The funds have moved into town and are appointing receivers on a weekly basis on to properties. They are also suppressing information. We are dealing with a scenario where when it comes to legal documentation, these funds will only provide limited information, which means that clients must go to the High Court to get documentation regarding the loans they have taken out. The clients will not get this documentation from the vulture funds themselves. These funds are refusing offers without any explanation as to why nor are the clients being informed as to why this is so.

The other issue is that in one case, the vulture fund agreed an offer and then moved on from that offer when the client came up with the money, and it would not agree to the figure when the money was made available.

We have significant issues here and I am very concerned about where this is going to go. There has been an activity in the marketplace in the past six to eight months where the view taken is that these funds will come into town and will liquidate properties, hotels, farms and shops. The Central Bank needs to step in because engagement is not there. There is no engagement and it is an active policy of the funds not to talk to their clients. The frustration within communities is beyond belief.

There is also a knock-on fear because interest rates have gone up in the past few months and we are now genuinely concerned about where unfortunate people are who may be under pressure in the future. Will AIB do the exact same thing it has done previously? Will it move more loans onto vulture funds, which will create the exact same issue, where the vulture funds will not deal with the client and will liquidate their properties?

The Central Bank needs to step in. It has ultimate power and regulation and it is the broker in this game. The Central Bank needs to come into town to ensure regulations are put in place to ensure that this issue is dealt with.

We need to have public interest directors brought back into play. We had public interest directors - the Chair knows this well - on bank boards previously. They need to come back because without the public interest directors, the banking system will operate like the wild west.

Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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I thank the Senator for raising this important issue.

Before giving him a proper answer in respect of the Central Bank and mortgage protection, as a constituency Deputy, I completely understand the scenario he is raising. I will not comment on any individual case but I too have had cases of mortgage holders trying to contact providers and not being able to get through. If it is the other way around, such communication is registered as a "not call back". There is an imbalance in respect of communication and in how people engage. I fully understand that from a constituency Deputy perspective. That is why in the Department of Finance we have raised this with the Central Bank. I know that the senior Minister, Deputy McGrath, in his monthly engagements with the Governor has asked whether the Central Bank believes it needs any more powers, beyond the powers it currently has in respect of non-bank lenders at present.

At present, as the Senator will be aware, the Central Bank has a range of measures to protect consumers who have taken out mortgages. The consumer protection framework seeks to ensure that all Central Bank regulated entities, such as the ones the Senator described, are transparent and fair in all of their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle. For example, through initial marketing and advertising, in assessing affordability and suitability, but also at a time where borrowers may find themselves in financial difficulties. That may or may not be the case in the situation the Senator has mentioned, or in situations where there are non-bank lenders involved where these may well be performing loans. This applies to all scenarios, at all stages of the holding of a mortgage. This consumer protection framework applies to all Central Bank regulated entities that provide mortgage or other credit to consumers.

In addition, following the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2015 and 2018, any entity that services or holds the legal title to the rights of a creditor under such a mortgage or other credit agreement will, unless it already has an appropriate authorisation from the Central Bank, be required to be authorised by the bank as a credit servicing retail credit firm. These entities, which are often referred to as vulture funds, must act in accordance with Irish financial services law, and with the consumer protection regulatory framework that applies to all Central Bank regulated firms. It is currently the case, therefore, that where a loan is sold or assigned to another entity, the consumer protections that were available to borrowers prior to the transaction continue to be in place with the new owner. This ensures the relevant borrowers maintain the same regulatory protections they had when the loan was originally made, including under the various Central Bank statutory codes of conduct such the Consumer Protection Code and the Code of Conduct on Mortgage Arrears, CCMA.In particular, the code of conduct on mortgage arrears provides specific protections for borrowers in arrears facing the prospect of arrears on a loan secured on a primary residence. All relevant regulated entities, such as a bank, a retail credit firm or a credit servicing firm, must proactively encourage borrowers to engage with it about financial difficulties that may prevent them from meeting their mortgage repayments. Moreover, where a borrower is experiencing repayment difficulty, a regulated entity must explore all the options for an alternative repayment arrangement offered by the entity to determine whether a more suitable and sustainable repayment option is available based on the borrower's individual circumstances.

If a borrower is not satisfied with the options proposed, or if the regulated entity declines to offer an ARA, an appeals mechanism is provided for in the CCMA. In addition, a regulated entity must review an ARA at intervals that are appropriate to the type and duration of the arrangement, including at least 30 calendar days.

Nevertheless, in practicality, I understand that the case the Senator described is as much about communication with the entity as anything else. It is about being able to reach somebody at the other end of the phone, and it relates to a much more basic level of communication, in the first instance for example, than what I have described.

I have run out of time but I will give more detail in my follow-up response.

Tim Lombard (Fine Gael)
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The policy among banks previously was all about communication. It was about having the conversation, whereas the role of bank manager is now defunct. They are like the parish priest; they do not exist any more. There are no bank managers. If you want one, you should call a phone line, and that is the first issue we have. The problem with vulture funds is that even if you call them, you will not get a response or acknowledgement. The Minister of State made an interesting point when she stated that if a client did not respond, he or she would be considered not to have engaged, but on the other side, there seems to be no acknowledgement of that happening, and that is a big issue for clients. The majority of these people are able to pay; the problem is they cannot engage because they are not able to talk to these entities or individuals.

The Governor of the Central Bank needs to take a completely different look at what is happening. The movement in the marketplace in the past six months with respect to vulture funds has been frightening. They have moved on properties that relate to assets that are worth multiples of the loan. They are then selling them in online auctions, without having carried out due diligence regarding title deeds and everything else, and they are getting only a fraction of the value. That is the other issue. They dispose of properties but get only a fraction of the value because of how they handle the sale. This is a massive mess. The Central Bank needs to be brought in and spoken to about this issue. Otherwise, the wild west out there will continue.

Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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I assure the Senator that, while the Central Bank is an independent regulator, the Minister for Finance engages with the Governor monthly, and the question of regulation and engagement with non-bank lenders has been raised and continues to be raised. The Central Bank has advised it expects all regulated entities to take a consumer-focused approach in respect of any decision that affects their customers. In particular, the protection of mortgage loan borrowers, including those in arrears, is a key priority and the Central Bank has indicated it will continue to supervise compliance by all the regulated entities with the CCMA and the consumer protection code.

The code is not voluntary. It is mandatory, and there is no question of regulated entities not following it. Failure to do so can result in the Central Bank using its range of powers to ensure adherence to the code, including administrative sanctions and legal action. I encourage the Senator, if he has information he wishes to share with the Central Bank about a regulated firm not complying with the code, to submit that information to the Central Bank as soon as possible.