Michael McGrath (Cork South Central, Fianna Fail)
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75. To ask the Minister for Finance the number and value of business loans that are now owned by unregulated non-bank lenders; and if he will make a statement on the matter. [26434/17]

Michael Noonan (Limerick City, Fine Gael)
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I have been informed by the Central Bank that it does not routinely publish specific data on entities who are not regulated by the Central Bank and it is therefore not possible to provide the number and value requested by the Deputy.

I would however refer the Deputy to the Report on Mortgage Arrears which the Central Bank provided to the Minister for Finance in June 2016() which provides details of the total number of loans/value of loans owned by unregulated entities as at the end of June 2016.

Loans can be sold by regulated entities to entities that are not regulated by the Central Bank.  In July 2015, the Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm.

Under the 2015 Act, if the firm which bought loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’ (Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities). Credit Servicing Firms are required to obtain authorisation from the Central Bank in order to conduct credit servicing activities as defined in the 2015 Act. A register of those firms which have notified the Central Bank that they wish to avail of the transitional provisions provided for in the legislation (whereby, by virtue of the 2015 Act, they are taken to be authorised to carry on the business of a credit servicing firm pending a decision on their application by the Central Bank) and those firms that have been authorised to carry on the business of a credit servicing firm is available on the Central Bank website. 

Credit servicing firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including under the various statutory Codes of Conduct issued by the Central Bank.

Additionally, the SME Credit Demand Survey, conducted on behalf of the Department of Finance, monitors the credit requirements of SMEs.  The latest survey indicates that non-bank finance for SMEs is considerably lower than bank finance. For the period April to September 2016, the survey indicates that 8% of SMEs sought non-bank finance, which represented an increase of 1% on the previous period.