Fianna Fáil Spokesperson on Finance Michael McGrath has described the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 as a cop out which leaves the key decisions relating to mortgages in distress in the hands of unregulated vulture funds.
“The initial intention regarding the oversight of the sale of mortgages was to make the ownership of credit a regulated activity. It appears that the Minister for Finance has backed away from this under pressure from financial institutions. This leaves us with a half-baked system whereby the servicing agent for the mortgage will need to be regulated but the same requirement will not be placed on the actual owner of the mortgage. The Minister is setting up a two tier system and an opportunity to provide for the effective regulation of the sale of mortgages has been lost.
“Vulture funds who outsource the administration of loans will essentially still control key decisions such as initiating action for repossession or raising the interest rate that applies to the loan without actually be subject to regulation. This leaves a potentially dangerous gap in the legislation. There is also very legitimate concern that loans may be sold more than once with each subsequent transaction resulting in a deterioration of the conditions of the borrower in respect of the interest rate, penalty charges and the status of any restructuring arrangement.
“The Minister should amend the legislation to ensure that any borrower who has entered into a restructuring arrangement and who is sticking to it, cannot have that payment structure cancelled by the acquirer of a loan or an agent operating on their behalf.
“The Government also needs to look again at the adequacy of the Code of Conduct on Mortgage Arrears. The Minister for Finance has acknowledged that no bank or financial institution had been subject to sanction for failure to abide by the CCMA. This is despite widespread concern over the treatment by banks of customers in arrears. Last year over 10,000 new repossession cases were initiated and as it stands the CCMA is not fit for purpose in dealing with this avalanche of cases.”