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Written Answers 27 March 2018 Written Answers. The following are questions tabled by Members for written response and the ministerial replies as received on the day from the Departments [unrevised]. Questions Nos. 1 to 17, inclusive, answered orally. Questions Nos. 18 to 57, inclusive, resubmitted. Questions Nos. 58 to 68, inclusive, answered orally. Financial Services Regulation 27/03/2018WRA0070069. Deputy Bernard J. Durkan asked the Minister for Finance when he will introduce statutory rules appertaining to the code of conduct applicable to primary and secondary lend- ers or their agents (details supplied); and if he will make a statement on the matter. [13650/18] 27/03/2018WRA00800Minister for Finance (Deputy Paschal Donohoe): As the Deputy will be aware, within the remit of the Central Bank’s responsibilities for safeguarding stability and protecting con- sumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place. The Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Con- sumer Protection Framework. It is a statutory Code, issued under Section 117 of the Central Bank Act, 1989. The CCMA is a lengthy document which has evolved to reflect the changing times and situ- ations which have arisen in the area of consumer protection. For example, an Addendum to the CCMA was published to take account of the Consumer Protection (Regulation of Credit Servic- ing Firms) Act 2015 which stated that with effect from 8 July 2015, credit servicing firms, as defined in the 2015 Act, must apply for authorisation to the Central Bank and that the CCMA 2013 would apply to these firms. The great benefit of the CCMA not being a piece of primary legislation is that it can be amended relatively quickly to respond to changing events, pursuant to Section 117 of the Central Bank Act, 1989, while still remaining statutory. The CCMA is aimed specifically at the process to be followed by relevant firms, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner. A key element of the Central Bank’s role is ensuring that the consumer protection regulatory framework is fit for purpose so that consum- ers best interests are protected. To this end, I have also asked the Central Bank to carry out a review of the CCMA to ensure it remains as effective as possible and for the review to be completed as soon as possible. 119 Questions - Written Answers Mortgage Resolution Processes 27/03/2018WRA0090070. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank will review its principles for redress and compensation under the tracker examination to reflect the fact that many consumers have employed financial advisers and that this extra cost should be reflected in their awards. [13655/18] 27/03/2018WRA01000Minister for Finance (Deputy Paschal Donohoe): The Central Bank’s Tracker Examina- tion is focused on ensuring that lenders provide fair outcomes for all customers impacted by tracker related failings. As part of the Examination framework, where customer detriment has been identified, the Central Bank has clearly articulated its expectations of lenders to provide appropriate redress and compensation to impacted customers in line with its prescribed Prin- ciples for Redress. The provision of redress is intended to return impacted customers to the position that they would have been in had the relevant issue not arisen and the compensation, which is to be reasonable, must reflect the detriment involved arising from and/or associated with being on an incorrect rate. Such compensation is to reflect the specific circumstances of each impacted customer. The Central Bank’s Principles for Redress also set out that the lender is to provide impacted customers with an additional payment to allow them to take independent legal or other profes- sional advice regarding the redress and compensation offers made to them. This additional payment is to be commensurate with the complexity of the advice required by the impacted customer depending on the individual circumstances of the impacted customer’s case. Another important part of the Examination Framework is the requirement for lenders to establish independent Appeals Panels, specifically to deal with customers who are not satisfied with any aspect of the redress and compensation offers that they receive from lenders. The ap- peals process is additional to the options of bringing a complaint to the Financial Services and Pensions Ombudsman or initiating court proceedings. Importantly customers can also accept the redress and compensation offered and still make an appeal to the independent appeals pan- els. Customers’ rights to make appeals to the Financial Services and Pensions Ombudsman and through the courts are also preserved. Credit Unions 27/03/2018WRA0110071. Deputy Michael McGrath asked the Minister for Finance the steps he is taking or plans to take to create a new strategy for the growth and development of the credit unions; and if he will make a statement on the matter. [13646/18] 27/03/2018WRA01200Minister for Finance (Deputy Paschal Donohoe): The Government has a clear policy to support the strategic growth and development of credit unions delivering the comprehensive recommendations set out in the Commission on Credit Unions Report and the Credit Union Advisory Committee (CUAC) report in 2016, both of which involved extensive stakeholder engagement. CUAC remains an important advisor to me on strategic issues facing the sector. An Implementation Group which is working to implement the seven recommendations of the CUAC report has submitted papers on long-term lending and consultation and engagement to the Central Bank and is currently drafting a paper on Tiered Regulation. While there are challenges to returns arising from the low yield environment and low loan to asset ratios, the sector continues to show signs of improvement reflected in growth in new lending, delivering c 35% of all unsecured consumer lending in 2017, a decrease in the level of 120 27 March 2018 reported arrears and an increase in reserves. Total assets have increased consistently for many years and currently stand at approximately €16.8 billion. There are other areas where support has been provided including the establishment of the Credit Union Restructuring Board (ReBo) and the availability of €250 million for voluntary restructuring of credit unions facilitated by ReBo which oversaw 82 restructuring projects in- volving 156 credit unions during its lifetime. These newly merged credit unions are now better positioned to harness the efficiencies of their increased scale to prudently develop products and services that their members are looking for now, and into the future. In addition revised regulations for credit unions commenced on 1st March 2018 which make changes to the investment and liquidity requirements and allow for greater diversification of investment income, including provision for up to €700 million investment in Tier 3 Approved Housing Bodies. This Government recognises the important role of credit unions as a volunteer co-operative movement and its priorities remain the protection of members’ savings, the financial stability of credit unions and the sector overall. The Government is determined to continue to support a strengthened and growing credit union movement. Credit unions are member owned and it is these members, with support from their representative bodies, who ultimately are responsible for setting and implementing their own individual strategic plans, with appropriate support from Government, which reflect the diverse nature of credit unions be they urban or rural, large or small, industrial or community. Central Bank of Ireland Data 27/03/2018WRA0130072. Deputy Michael McGrath asked the Minister for Finance if he will request the Central Bank to compile up to date data on the number and value of SME and farm loans held by un- regulated loan owners; if the Central Bank can compile such data; and if he will make a state- ment on the matter. [13644/18] 27/03/2018WRA01400Minister for Finance (Deputy Paschal Donohoe): I have been informed by the Central Bank that it does not routinely publish specific data on entities who are not regulated by the Central Bank and it is therefore not possible to provide the numbers requested by the Deputy. I would however refer the Deputy to the Report on Mortgage Arrears which the Central Bank provided to the Minister for Finance in June 2016. The report is available on the depart- ment’s website and provides details of the total number of loans/value of loans owned by un- regulated entities as at the end of June 2016. Loans can be sold by regulated entities to entities that are not regulated by the Central Bank. In July 2015, the Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm. I should also refer to the Deputy’s Private Members’ Bill which was discussed in the Dáil on 6 March and which seeks to increase consumer protections when loans are sold by requiring the regulation of loan owners by the Central Bank. The Government has committed to supporting the passage of this legislation and my of- ficials are actively working to resolve the drafting challenges presented by the legislation in its current form. I understand that a meeting will be held with the Deputy this week. 121 Questions - Written Answers Under the 2015 Act, if the firm which bought loans from the original lender is an unregu- lated firm, then the loans must be serviced by a ‘credit servicing firm’.
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