Bernard Durkan (Kildare North, Fine Gael)
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133. To ask the Minister for Finance the steps he will take to modify the impact on business here with particular reference to small and medium sized enterprises that have been affected by the off loading of loan books to third parties by various lending institutions, some of whom have ceased to trade in this jurisdiction but whose banking activities had a major negative impact which results in the collapse of the banking system here whether with or without the approval of the Central Bank and ECB; and if he will make a statement on the matter. [34360/16]

Michael Noonan (Limerick City, Fine Gael)
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The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 was enacted in July 2015 in order to ensure that borrowers, including SMEs, maintained regulatory protections when their loans were sold on to third parties.

It was introduced to fill a consumer protection gap that existed 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 (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.

Additionally, following a review in 2015, the Central Bank Code of Conduct for Business Lending to Small and Medium Sized Enterprises has been strengthened resulting in the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which came into operation on 1 July 2016. The aim of the Code and these Regulations is to facilitate access to credit, promote fairness and transparency, and provide a framework for dealing with financially difficult cases.

The key effect of the enacted legislation is that 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.