The Central Bank asked the Government to consider allowing it to regulate vulture funds as far back as 2011, amid fears that unregulated foreign hedge and private equity funds buying mortgage books from Irish banks would treat borrowers unfairly.
In 2007, a core part of the Central Bank Act was amended to bring non-deposit lenders under the remit of the Central Bank.
However, foreign hedge and equity funds, including special purpose vehicles used in securitisations (pooling of loans and mortgages) were excluded from regulation under the Consumer Credit Act, meaning they do not have to abide by the Central Bank's code of conduct on mortgage arrears (CCMA).
In April 2011, Sharon Donnery, now Deputy Governor at the Central Bank, wrote to the Department of Finance asking it to consider the exemptions as a matter of urgency as Irish banks were then considering selling their mortgage books.
"In reviewing this matter, careful consideration must be given to the rationale for excluding special purpose vehicles in the first instance and whether these reasons still stand," she wrote.
The Government finally moved last year to regulate credit services firms administering loans on behalf of unregulated funds, subjecting credit services firms to the CCMA.
In her first interview since her appointment last January as Deputy Governor, Donnery said that mortgage borrowers now have equivalent protection regardless of who their mortgage is with.
Donnery, who is the chairwoman of the European Central Bank's high-level task force on non-performing loans (NPLs), said that the protection of vulnerable borrowers, including the prospect of increased regulation of non-bank entities "is one thing to be looked at" as the Government tackles a major housing supply crisis.