Fianna Fáil Spokesperson on Finance Michael McGrath TD has welcomed the passage, in Seanad Éireann this afternoon, of the Fianna Fáil Private Members’ Bill to regulate so called ‘vulture funds’.
The Bill has now passed through both Houses of the Oireachtas and will be sent to the President to be signed into law. Its provisions are expected to come into effect in January 2019.
Deputy McGrath commented, “Today is a good day for mortgage holders, business owners and farmers whose loans have been sold on to so called ‘vulture funds’ or who fear their loan will be sold by their bank in the future. When this Bill is signed into law, ‘vulture funds’ can be directly inspected and investigated by the Central Bank. The regulator will also, if necessary, be able to take enforcement action against these funds.
“Up until now, these funds have been untouchable. The Central Bank will now for the first time be able to have direct contact with these funds and apply strict regulation directly to them. The Bill will ensure that whoever is ultimately calling the shots on the management of a loan portfolio will be regulated.
“Under pressure from European and domestic regulators to reduce their level of non-performing loans (NPLs), we have seen an acceleration in the trend of banks selling off their loans to ‘vulture funds’ in recent months. Permanent TSB, Ulster Bank and AIB – to name just a few retail banks – have progressed loan sales in recent months. Significantly, Bank of Ireland has not ruled out loan sales into the future. Mortgages, business and farm loans are now being sold on in very significant numbers.
“Under the present system, the borrower never gets to see or meet the people in the fund who make all the important decisions concerning their loan. Instead, all contact is with a regulated credit servicing firm or ‘middleman’ who isn’t making any of the decisions and is in effect a conduit between the borrower and the fund. Those controlling the loan and making the vital decisions must be regulated and held accountable by the authorities here.
“Fianna Fáil has consistently questioned the need for such loan portfolio sales. While I accept that pressure is being applied from the Single Supervisory Mechanism to reduce NPLs, it would be far better if the banks worked through their loan books in a proactive way and dealt with loans on an individual basis.
“The passage of this Bill today is an important step forward. However, Fianna Fáil believes that further reforms are needed to tackle the tens of thousands of legacy mortgage arrears cases. The current process sees nearly half of all personal insolvency arrangements failing. As a result, it has been judges who have prevented large scale repossessions rather than the government. The bank veto needs to be removed and fair and sustainable loan solutions need to be put in place,” concluded McGrath.