Michael McGrath (Cork South Central, Fianna Fail)
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163. To ask the Minister for Finance if a person or organisation buying a commercial loan must be a regulated entity; and if he will make a statement on the matter. [15549/16]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Central Bank that there is no requirement for the purchaser of a commercial loan from a bank to be a regulated entity.

However, as the Deputy will be aware, 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 including the Consumer Protection Code, the Code of Conduct on Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code which is being replaced by 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.

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.  Furthermore, it is important to highlight that the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.