FF Legislation brings 37 previously unregulated ‘vulture funds’ into the Central Bank’s regulatory net – McGrath

Fianna Fáil Spokesperson on Finance, Michael McGrath TD, has welcomed confirmation that some 37 entities have begun the process to be regulated by the Central Bank as a result of the Fianna Fáil private members’ bill which became law in January 2019.

Deputy McGrath commented, “Up until now, these firms have been classified as unregulated loan owners.  Many of these so called “vulture funds” have been buying up mortgages, business and farm loans for many years and up until this year they have done so without any direct supervision from the Central Bank.

“Up until 2015 loans, including family home mortgages, were sold to ‘vulture funds’ without any consumer protection legislation being put in place. Under pressure from Fianna Fáil and others, the Government brought in legislation in 2015 to regulate the servicing agents / intermediaries through whom all the contact with customers was channelled.  This was a half-baked measure as it only regulated the intermediary and not the ultimate loan owner who made all the key decisions.

“Last year as Permanent TSB was announcing a loan sale of non-performing mortgage loans, Fianna Fáil introduced the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2018.  This Bill sought to regulate these ‘vulture funds’ for the first time.  That legislation was signed into law late last year and was commenced in January 2019. The Central Bank as regulator has the power to inspect, investigate and take enforcement action against these funds as appropriate.

“As of now, nearly 34,000 mortgages are owned by these ‘vulture funds’ amounting to over €6 billion of debt.  Nearly €4 billion of this amount is currently in arrears so it is crucial that these mortgage holders have the appropriate consumer protections in place. The Central Bank needs to use the full suite of powers it has been given under this legislation.

“According to the Central Bank, some 37 previously unregulated funds are now in the process of being regulated.  This includes the likes of Mars Capital, Tanager, Promontoria, Beltany Property Finance and many others  This means that the Central Bank is enabled to scrutinise and supervise these firms and undertake onsite checks.

“Of course this is not the full story.  I have no doubt that certain funds are still behaving in ways that are far from acceptable.  It is critical that the Central Bank now uses its extra power to make a real difference.  I am under no illusions – fixing mortgage arrears is a challenging issue but ‘vulture funds’ and lenders have to do better.  They have to provide long term fair and sustainable solutions for the mortgage holder,” concluded McGrath.