Martin Heydon (Kildare South, Fine Gael)
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75. To ask the Minister for Finance his plans to assist borrowers whose loans are sold to third parties such as vulture funds; his further plans to protect the rights of borrowers; and if he will make a statement on the matter. [16417/16]

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 entity. 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.

Under the Act, if the firm who bought the loans from the original lender is an unregulated firm then the firm must either become regulated themselves or 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 the various codes mentioned above and Fitness and Probity Standards (including minimum competency requirements).

In addition to compliance with Central Bank codes of conduct, credit servicing firms will have to demonstrate to the Central 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.

The Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 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.

The Government's commitment on this issue is underlined by the Programme for a Partnership Government which provides that "To reflect the growing public concern regarding credit servicing firms and other property firms we will ask the Central Bank and the Oireachtas Committee on Housing to examine the legislation introduced last year that ensured that borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale. We will provide greater protection for mortgage holders and tenants and SMEs whose loans have been transferred to non-regulated entities ('vulture funds')." This is a Year 1 Action in the programme.