Eoghan Murphy (Dublin South East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

225. To ask the Minister for Finance the actions he has taken to protect businesses and homeowners whose loans were previously in the Irish Bank Resolution Corporation and which have now been transferred to overseas venture funds. [46315/14]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In relation to mortgage loans previously sold by IBRC, the Special Liquidators sought and received the agreement of bidders and the ultimate purchasers of IBRC mortgage loans to voluntarily comply with the terms of the Code of Conduct on Mortgage Arrears. I understand that these mortgages are currently being serviced in line with those terms.

Furthermore, the Department of Finance has prepared the Sale of Loan Books to Unregulated Third Parties Bill in order to address concerns surrounding the continued applicability of the Code of Conduct on Mortgage Arrears after the sale of loan books to unregulated entities. Detailed engagement with the Attorney General's office and the Central Bank on draft legislation has commenced and in July and August of this year, my Department ran a public consultation seeking views on its proposed legislation to protect consumers whose loans are sold to unregulated entities. The Department of Finance received 18 submissions from a range of respondents from the financial services industry, consumer groups, public representatives and individuals and other stakeholders. Officials in my Department are carefully considering the submissions and it is anticipated that legislation will be published by the end of this year.

The relevant code of conduct that can apply to certain business borrower lender relationships is the Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code). The application of the SME Code varies depending on whether the relevant purchasing entity of the commercial loans is a regulated entity or an unregulated entity. If the purchasing entity is a regulated entity, it is required to comply with the SME Code. If the purchasing entity is not a regulated entity, it is not required to comply with the SME Code.

In terms of context, unlike consumer lending, business lending is not an activity which, in and of itself, must be undertaken by a regulated entity i.e. an unregulated entity could be established for the sole purpose of lending to SMEs and this would not require authorisation, and would not be subject to any legislation or codes.

It is also important to note that the sale of these loans does not change the terms and conditions of the loan agreement in any way. Irrespective of who acquires the loan(s) they will be required to honour the legal terms and conditions of the existing loan agreement(s).