Michael McGrath (Cork South Central, Fianna Fail)
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257. To ask the Minister for Finance if he has given consideration to requiring pre-approval from the Central Bank for the disposal by bank and non-bank lenders of residential mortgages until such time as the Central Bank is satisfied that the purchaser of the loan has put in place adequate procedures for the resolution of arrears cases and satisfactory administration of such loans; and if he will make a statement on the matter. [13435/16]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears, Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which comes into operation on 1 July 2016. The Code of Conduct for Mortgage Arrears provides protections for borrowers who endeavour to meet their commitments in relation to their mortgages and the 2015 Act ensures that these protections apply when a loan has been sold. Credit servicing is broadly defined and includes managing or administering repayments under the credit agreement and the process by which a relevant borrower's financial difficulties are addressed.  

It is a matter for the purchaser of loans to ensure that they comply with all Irish legislation, including the rules relating to credit servicing. Purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm that is regulated by the Central Bank.

Requiring pre-approval runs the risk of imposing unnecessary costs on possible purchasers when the credit servicing will be regulated in any case.