The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (the "Act") was introduced to ensure that consumers and SMEs whose loans have been sold to unregulated entities will continue to enjoy the same protections they enjoyed prior to the sale of their loan. The Act creates a new type of regulated entity (the "credit servicing firm"). A credit servicing firm is one which interact directly with borrowers in relation to their loans. The Act amends the provisions of a number of the Central Bank Acts.
As credit institutions in the State continue to repair their balance sheets and deleverage through the sale of large loan portfolios some concern had been expressed in relation to the sale of such portfolios to unregulated buyers. This is because the sale of loan portfolios often resulted in consumers and SMEs losing the various protections which they had been afforded while dealing with their original lenders such as the Code of Conduct on Mortgage Arrears, the Consumer Protection Code and the Code of Conduct for Business Lending to Small and Medium Enterprises (the "Central Bank Codes").
Although many purchasers of loan books had already agreed to voluntarily apply the Central Bank of Ireland ("CBI") codes when managing loan books, voluntary compliance was not enforceable by any state agency. As a result, the Government committed to ensuring these protections would be made available for all consumers whose loans have been sold to unregulated entities. The Act will require entities engaging in credit servicing to be authorised by the CBI and subject to the Central Bank Codes.
WHAT IS CREDIT SERVICING?
The Act defines credit servicing as "managing and administering a loan agreement" and expressly includes a number of activities set out in the Act including:
Notifying the relevant borrower of changes in interest rates or in payments due under the credit agreement or other matters of which the credit agreement requires the relevant borrower to be notified; Taking any necessary steps for the purposes of collecting or recovering payments due under the credit agreement from the relevant borrower; Managing or administering any of the following: repayments under the credit agreement; any charges imposed on the relevant borrower under the credit agreement; any errors made in relation to the credit agreement; any complaints made by the relevant borrower; information or records relating to the relevant borrower in...