Bernard Durkan (Kildare North, Fine Gael)
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103. To ask the Minister for Finance if provision can be made statutorily or otherwise to ensure that venture capital purchasers of loan books are required to comply with guidelines set down by the Central Bank and the need to ensure the ongoing accommodation of borrowers who continue to make consistent efforts to meet repayment requirements; and if he will make a statement on the matter. [17767/16]

Michael Noonan (Limerick City, Fine Gael)
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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 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, the Code of Conduct on Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises. The Act means that any purchasers of loans books are required either to become regulated themselves by the Central Bank or use a regulated credit servicing firm to service their loans.

The Act also ensures that a regulated credit servicing firm cannot do something, or fail to do something, which would be a prescribed contravention if performed, or not performed, by a retail credit firm. It also prevents the owner of credit from instructing a regulated credit firm to perform such an action, thereby further enhancing the consumer's protections.

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 already 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.

Furthermore, the Code of Conduct for Mortgage Arrears (CCMA) 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.

The CCMA sets out how mortgage lenders must treat borrowers in or facing mortgage arrears, with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. All cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her mortgage obligations. The CCMA sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or pre-arrears.