Michael McGrath (Cork South Central, Fianna Fail)
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144. To ask the Minister for Finance the legislative basis for the application of the code of conduct on mortgage arrears, the consumer protection code, the mortgage arrears resolution process and the mortgage arrears resolution targets in respect of lenders which are regulated entities and lenders which are non-regulated entities; and if he will make a statement on the matter. [14154/16]

Michael Noonan (Limerick City, Fine Gael)
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The Code of Conduct on Conduct on Mortgage Arrears (which includes the Mortgage Arrears Resolution Process) and the Consumer Protection Code are issued under Section 117 of the Central Bank 1989. The Central Bank has the power to administer sanctions for a contravention of these Codes, under Part IIIC of the Central Bank Act 1942. This applies to all regulated entities operating in the State.

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 Consumer Protection Code and the Code of Conduct on Mortgage Arrears.

I should add that the Central Bank has updated each of the Codes in order to ensure that Credit Servicing Firms are subject to these Codes directly in their own right. This has been done for the sake of certainty and transparency, in order to make it explicit that the activity of credit servicing is a regulated activity within the meaning of the Codes and firms carrying out that activity are regulated entities in their own right with respect to that activity.  As I have previously said, the Mortgage Arrears Resolution Targets (MART) were introduced as a prudential policy measure for credit institutions. Full details of their legal basis were provided in the Central Bank's press release which is available here: .

Mortgage Arrears Resolution Targets applied from March 2013 to December 2014.  They had applied to ACC Bank plc, Allied Irish Bank plc (including AIB Mortgage Bank, EBS Limited and EBS Mortgage Finance), The Governor and Company of the Bank of Ireland (including Bank of Ireland Mortgage Bank and ICS Building Society), KBC Bank Ireland plc, Permanent Tsb plc and Ulster Bank Ireland Limited with respect to their Republic of Ireland principal dwelling home/primary residence (PDH ) and buy-to-let (BTL) mortgagees.  In April 2015, the Central Bank determined that relying on common quarterly solution targets across all banks was no longer appropriate and wrote to each bank setting out new requirements. 

I would reiterate that authorised Credit Servicing Firms (including those who have notified the Central Bank that they wish to avail of the transitional arrangements provided for under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015) are required to comply with the requirements of financial services legislation including the Central Banks statutory codes and in particular the CCMA (including as it pertains to matters such as engagement with the borrower). They are also required to comply with the provisions of other legislation in force in the State as it applies to their activities, including the Personal Insolvency Act 2012.