Michael McGrath (Cork South Central, Fianna Fail)
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127. To ask the Minister for Finance if his Department or the Central Bank has a record of the number of commercial loans that have been sold on by the original underwriter and if so, the details; if the Central Bank must be notified when a commercial loan has been sold on; his views on the fact that a commercial loan could be sold on to a competitor of the borrowers; and if he will make a statement on the matter. [40655/16]

Michael Noonan (Limerick City, Fine Gael)
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I have been informed by the Central Bank that it does not maintain a record of the number of commercial loans sold on by the original underwriter. Portfolio sales are considered as part of normal supervisory engagement where they are sufficiently material.

However, the Deputy will be aware that legislation and regulations have been implemented by the Oireachtas and Central Bank to protect SMEs when dealing with regulated and unregulated firms.

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 (such as the Consumer Protection Code, the Code of Conduct on Mortgage Arrears, the Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland.

Under the 2015 Act, therefore, 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.

Also, following a review in 2015, the Code of Conduct for Business Lending to Small and Medium Enterprises, has been strengthened in certain areas 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.