Written answers

Tuesday, 14 June 2016

Department of Finance

Financial Services Regulation

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
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152. To ask the Minister for Finance the protection available for persons who have loans with non-banking financial companies based outside Ireland; and if he will make a statement on the matter. [15377/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I assume that the Deputy is referring to the protections in place for persons whose loans have been sold to non-bank entities based outside Ireland and will answer accordingly.

The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 was enacted in July 2015 and is designed to protect consumers whose loan portfolios are sold onto unregulated entities.

The Act introduces a regulatory regime for a new type of entity called a 'credit servicing firm'. These are firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities. Under the Act, 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 who is regulated by the Central Bank.

The Central Bank is now the competent authority for the authorisation and supervision of credit servicing firms. Credit servicing firms must comply with all relevant requirements of financial services legislation, 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 Consumer Protection (Regulation of Credit Servicing Firms) Act also includes a statutory obligation on an authorised credit servicing firm not to perform any action that a regulated lender would not be allowed to do. This additional protection seeks to ensure that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale.  

In addition to compliance with Central Bank codes of conduct, the Central Bank have confirmed that credit servicing firms will have to demonstrate to the Bank that they have:

- Robust governance and adequate resources to ensure compliance;

- Agreements with loan owners that enable the credit servicing firm to fully comply with its obligations under Irish financial services legislation; and

- Adequate and effective control of loan servicing in the State to enable Central Bank oversight.

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