Róisín Shortall (Dublin North West, Social Democrats)
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100. To ask the Minister for Finance if borrowers are entitled to be informed if a transfer of a loan takes place; if a physical transfer paper trail in keeping with the Central Bank code of transfers for mortgages needs to be maintained in line with section 8(h) of the Data Protection Acts 1988 and 2003, which provides that consent of the data subject is required for a transfer of data; if he has satisfied himself that these rules are being adhered to by banks dealing with mortgages that are in arrears of have been foreclosed; and if he will make a statement on the matter. [52292/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am informed by the Central Bank that when a consumer takes out a loan from a regulated lender, it is subject to adherence to all the relevant consumer protections.

In relation to the transfer of a loan taking place, most loan agreements include a clause that allows the original lender to sell the loan onto another firm. Provision 3.11 of the Central Bank’s Consumer Protection Code 2012 (the Code) requires that where a regulated entity intends to transfer all or part of its regulated activities to another regulated entity, it must:

- notify the Central Bank immediately;

- provide at least two months’ notice to affected consumers to enable them to make alternative arrangements;

- ensure all outstanding business is properly completed prior to the transfer;

- inform the consumer of how continuity of service will be provided following the transfer; and

- inform the consumer that their details are being transferred to the other regulated entity, if that is the case.

In July 2015, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”) was enacted, which introduced a regulatory regime for a new type of entity called a ‘credit servicing firm’. Under the 2015 Act, if the firm who bought the loans from the original lender is an unregulated firm then the loans must be serviced by a credit servicing firm who is regulated by the Central Bank. Credit servicing firms must act in accordance with 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 they had prior to the sale, including under the various statutory codes of conduct issued by the Central Bank, such as the Code, the Code of Conduct for Mortgage Arrears 2013 and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Small and Medium-Sized Enterprises) Regulations 2015.

Since the enactment of the 2015 Act, the original lender must now provide a consumer with at least 2 months’ notice before transferring all or part of a loan book covered by the Code to another person, including where the transferee is an unregulated entity. Where the transferee is an unregulated entity, the Code now requires that the regulated lender also notify the consumer of the regulated entity that will be ‘servicing’ the loan for the unregulated entity. This was not the case before the enactment of the 2015 Act because servicing a loan was not a regulated activity requiring authorisation by the Central Bank. In the event that the entity ‘servicing’ a loan for an unregulated entity is to change, the existing credit servicing firm must also notify the Central Bank and the consumer in advance, in accordance with the timelines set out under Provision 3.11 of the Code.

In relation to record keeping, the Central Bank has informed me that Chapter 11 of the Code provides that regulated entities must retain records for six years from the date on which the regulated entity ceased to provide any product or service to the consumer concerned. In addition, a regulated entity must maintain complete and readily accessible records and, upon being required by the Central Bank to do so, provide to the Central Bank records evidencing compliance with the Code for a period which the Central Bank may specify (up to maximum period of six years).