The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2018 (the Bill) passed both Houses of the Oireachtas on 18 December 2018. It was initiated in February 2018 but has been the subject of much debate and scrutiny both within the Financial Services industry in Ireland and at European Central Bank (ECB) level. It will amend Section 28 and Section 34F of the Central Bank Act 1997 (the 1997 Act), which Act was previously amended by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (the 2015 Act). The 2015 Act amendments (to the 1997 Act) required non-regulated loan purchasers of loans from regulated financial services providers to either become regulated credit servicers in respect of those loans, or appoint a regulated credit servicer. This ensured that consumers and SMEs continued to benefit from the various regulatory protection codes of conduct which applied to their loans prior to the sale.
The Bill will require the regulation of loan purchasers themselves directly. Holding legal title to credit and managing or administering such credit (including by determining the overall strategy for the management and administration of a portfolio of credit agreements, or maintaining control over key decisions relating to such portfolios) were functions which were originally permitted to remain with the unregulated loan purchaser (under the 2015 Act amendments). Once the Bill is enacted and commenced, any entity carrying out any such function will also be required to be a regulated credit servicing firm under the 1997 Act.
The Bill does helpfully exclude passive securitisation SPVs from the requirement to be regulated (to facilitate traditional credit institution RMBS securitisations, for example) and there are transitional provisions in relation to the newly regulated functions.
The Bill is now being sent to the President for signing. Once that has been completed, the Minister for Finance will publish a Statutory Instrument commencing the legislation. It is understood that the commencement date will be 21 January 2019.
