Tuesday, 13 October 2020
Department of Finance
98. To ask the Minister for Finance the recourse available for lenders that have disputes with financial institutions in circumstances in which loans have been sold off on a number of occasions and there is a dispute as to who owns the loan; and if he will make a statement on the matter. [29844/20]
When a consumer takes out a loan from a regulated lender it is subject to all relevant Irish and EU consumer protections. Most loan agreements include a clause that allows the loan to be sold to another firm. When a loan is sold, the relevant Irish and EU consumer protections continue to apply. All mortgages or loans which are sold or assigned to a new creditor will continue to be subject to the terms of the contract as entered into by the borrower. As a matter of contractual law, the new creditor will not be able to unilaterally change the terms and conditions of the contract.
I am advised by the Central Bank that under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018, which came into effect on 21 January 2019, that if a loan is transferred, the holder of the legal title to the credit must be authorised by the Central Bank as a credit servicing firm, if it is not already regulated as a credit institution or a retail credit firm. Such 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 that they had prior to the sale, including under the various statutory Codes of Conduct issued by the Central Bank, such as the Consumer Protection Code 2012(Code) and the Code of Conduct on Mortgage Arrears 2013(CCMA).
The Deputy should also be aware that the Central Bank issued an industry letter in August 2019 to banks, retail credit firms and credit servicing firms, to set out its expectations in relation to Mortgage Loan Transactions, including sales of residential mortgage loans. These expectations include, inter alia, that sufficient due diligence and information sharing takes place at the outset to ensure that complete customer files transfer as part of a loan sale.
However, if a borrower is not satisfied with how a regulated firm is dealing with them, or they believe that the firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. The relevant provisions as regards ‘Complaints Resolution’ are contained in Chapter 10 of the Consumer Protection Code.
If they are still not satisfied with the response from the regulated firm, they can refer the complaint to the Financial Services and Pensions Ombudsman (FSPO) to have it investigated; the FSPO is completely independent in the performance of his statutory functions. Investigations by the Ombudsman are free of charge to the complainant.