Borrowers whose loans are sold to unregulated entities will now be protected by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 which has just been signed by the President.
The purpose of the Act is to ensure that consumers retain the protections they had prior to the sale of their loan. Although many purchasers of loan books had already agreed to voluntarily apply the Central Bank codes when managing loan books, voluntary compliance is not enforceable. As a result, the Government committed to ensuring these protections would be made available for all consumers whose loans have been sold.
Minister Noonan stated: ‘This legislation was a priority issue for the Government. The purpose of this legislation is to protect consumers whose loans are sold by regulated financial service providers to unregulated firms.
This Act will require entities dealing with the consumer to be authorised by the Central Bank and subject to its Codes of Conduct including the Code of Conduct on Mortgage Arrears, the Consumer Protection Code and the Code of Conduct for Business Lending to Small and Medium Enterprises.
Borrowers will also have access to the Financial Services Ombudsman.
I welcome the broad support received in both Houses of the Oireachtas for this legislation and I am pleased that this legislation has been passed and that all borrowers will now have the same protections, whether their loan is sold or not.’
Ends
13th July 2015
Notes for Editors
The Act requires that credit servicing firms i.e. those firms who interact with borrowers, be authorised by the Central Bank and therefore subject to the Bank’s code of conduct.
The Act has transitional provisions to allow existing firms seek and obtain authorisation from the Central Bank while continuing to do business but they must obey the Codes in the meantime.
