INTRODUCTION
The Consumers’ Association of Ireland (CAI) is a wholly independent, non-profit, NGO, registered with charitable status, founded in 1966 to protect and promote the interests of consumers.
Government Objective & Purpose of the Consultation
The mission of the Government is straightforward:
To ensure that borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same regulatory protections as they had prior to the sale, including under various Central Bank Codes (including the Code of Conduct on Mortgage
Arrears (CCMA).
The Government is considering options on how best to achieve this. The proposed approach is through legislation as set out at Annex 1 and views are now being sought on the proposed draft legislation and relevant issues.
Proposed Legislation
In a nutshell, the proposed draft legislation makes the ownership of credit a newly regulated financial activity which requires Central Bank authorisation. It does this by changing the definition of “retail credit firm” to include firms which own the credit. As a result the owner of the loan would now be subject to regulation by the Central Bank of Ireland and affected mortgage holders would be covered by the regulatory protections under the Central Bank Codes. They will also have access to the Financial Services Ombudsman.
It is generally accepted that consumers need protection when they are taking out credit, during the course of holding the credit and when they are repaying the credit. It is not equitable that some of these protections can be avoided due to the regulatory position of the entity which owns the credit.
The proposed legislation will return consumers to the position in which they were before the loan book was sold.
August 22nd 2014.
Question 1
Do you think that the proposed approach will provide appropriate protections for mortgage holders whose loans are sold on?
The Consumers’ Association of Ireland considers that, as these legislative changes will restore the consumer to the position they held prior to the sale of the loan book, then the level of protection will be appropriately re-established.
Question 3
Do you think that the proposed approach is the best way to ensure that the protections enjoyed by mortgage holders with regulated entities are maintained when their loans are sold on? If not, what approach would you adopt?
The Consumers’ Association of Ireland considers that, as these legislative changes will restore the consumer to the position they held prior to the sale of the loan book, then the level of protection will be appropriately re-established.
Question 4
Will the proposed approach have any impact on the choice between outsourcing collection and selling on a loan book?
The full intention and goal must be to maintain a full and comprehensive level of consumer protection in every aspect of the contract to which the consumer has originally agreed and which, prior to sale, is/was in compliance with all codes.
Question 5
Please provide details of any further work or future challenges you can identify with this issue.
The issue of securitization requires to be treated with particular consideration for any and all future augmentations in context.
ENDS.
Consumers’ Association of Ireland
Fitzwilliam Business Centre
26 upper Pembroke Street
Dublin 2.