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Dáil Éireann debate -
Tuesday, 20 Feb 2018

Vol. 965 No. 7

Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2018: First Stage

I move:

That leave be granted to introduce a Bill entitled an Act to amend the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 to allow for the regulation of loan owners and sale of loans; and to provide for related matters.

The central provision of the Bill is the requirement that a credit agreement owner, in other words, a loan owner, must be fully regulated in the normal course by way of Central Bank supervision. This is the central plank of the Bill and what we are seeking to achieve. I welcome the Taoiseach's comments on the issue during Leaders' Questions, but this is about delivery and securing an important change in policy.

I will underline why this Bill is necessary. The Taoiseach said that the code of conduct applies in any event and that the lender must examine all possible alternative arrangements for the repayment of a loan. The nub of it, however, is that vulture funds do not offer the full suite of restructuring options. They will not, for example, offer arrears capitalisation, split mortgage options or term extensions because they simply do not wish to engage in any long-term restructuring of mortgages as they are not going to be here in 15 or 20 years to work out the mortgage book over that period.

I will give the House a real-life example. I am working with a group of Tanager mortgage owners. Tanager purchased the mortgages from Bank of Scotland Ireland. A number of those mortgage holders who are now with Tanager had been in difficulty during the economic crisis and had fallen behind in their repayments. They now have a level of arrears. For the past number of years, they have been repaying their mortgages in full, both interest and capital, but Tanager refuses to restructure their mortgages, to capitalise their arrears or extend the mortgage term. It is taking them to court. It has actually been thrown out of court by the registrar because any independent person looking at what has happened in that instance would see that Tanager is being entirely unreasonable. This is an example of why the vulture funds are different; they do not view loans in the same way as a regular financial institution.

It is a nonsense to suggest that it is acceptable that the credit servicing firm as the intermediary would be regulated. They make none of the decisions. All of the main decisions concerning the loan are made by the loan owner and in this instance, if they are an unregulated vulture fund, they are not accountable to anybody. The Central Bank cannot contact them, cannot knock on their door, cannot impose any sanctions and cannot carry out any intrusive inspections with regard to those entities. If one is trying to work with a borrower to restructure a loan, one goes through the credit servicing firm and it will pass on the contact and the communication to the ultimate loan owner. Vulture funds, however, are unregulated and unaccountable. As time goes on, we will find that these loans will be sold on again. This applies not just to mortgages, but also to small farming loans and SMEs. There is a gap in the legislation currently which will become even more prominent as time goes on and as the loans are sold on again.

I am not concerned as to how this change is brought about, be it a Fianna Fáil Bill or a Bill from another Member, but we really need Government support. The Taoiseach has the support of the Civil Service, the Attorney General, the Office of the Parliamentary Counsel and so on. The Taoiseach made positive soundings during Leaders' Questions that he is open to change and new protections and that we have made a strong case. I believe the case for change is compelling but it is now a matter for the Government to study this Bill. I will engage with the Minister for Finance in the days ahead and the Bill will be debated fully next week and voted upon, if necessary. It cannot end there. We are not going to accept the situation where the Government tries to kill the Bill with kindness. We want this measure to be enacted. We want all borrowers, from farmers to small business owners and mortgage holders, to be given equivalent protections as are given to all the other borrowers in the State. The best and most effective way of doing that is to ensure it is the actual loan owners that are fully regulated. This, after all, is what the regulator recommended back in 2015. We have it in writing from the Central Bank that its preferred option is the regulation of the loan owners. The Government chose to not go down that road at that time. There is absolutely no compelling reason whatsoever as to why these loan owners should not be regulated in the same way.

The other issue that concerns people is that if they have had their mortgage restructured and it is now being sold to a vulture fund, the restructuring agreement will come up for review after a number of years.

The fact of the matter is, the chance of even a performing restructuring agreement being sanctioned and renewed by the vulture fund is far less than it would be in the case of a normal credit institution. The case is compelling. It must be acted upon. We cannot stand over a situation in which up to 20,000 mortgage holders are sold to unregulated funds. I hope the Minister will heed that message and that we can work together in the weeks ahead to avert that scenario.

Is the Bill opposed?

Question put and agreed to.

Since this is a Private Members' Bill, Second Stage must under Standing Orders be taken in Private Members' time.

I move: "That the Bill be taken in Private Members' time."

Question put and agreed.
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