Michael McGrath (Cork South Central, Fianna Fail)
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73. To ask the Minister for Finance if his attention has been drawn to the fact that the Central Bank has no record of the number of SME loans that have been sold on to unregulated loan owners; if he will discuss this matter with the Central Bank; and if he will make a statement on the matter. [1727/17]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, I have been informed by the Central Bank that while it does not maintain a record of the number of commercial loans sold on by the original underwriter, material portfolio sales are considered within banking supervision in terms of their impact on the banks' balance sheet and financial position.  The Central Bank has also informed me that commercial loan sales will be reflected in the change in the value of outstanding loans to non-financial corporations in the Central Bank's monthly data. This data does not provide numbers of loans or breakdown by type of loan.  My officials are currently liaising with the Central Bank to assess what level of data can be recorded in relation to this matter.

The Deputy will also be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, enacted on 8 July 2015, 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 for regulated lenders (other than credit unions) and, in the case of credit unions, on 1 January 2017.