Central Bank seeking views on regulating mortgage managers
THE Central Bank of Ireland has issued a consultation paper on its plans to regulate firms that service mortgages books.
The sale by Irish banks of books or portfolios of home loans to unregulated mainly US funds has sparked controversy because its seen to leave borrowers vulnerable.
The Central Bank and Department of Finance have shied away from regulating funds that buy mortgages, but is looking to extend rules that apply to banks to firms that service or manage the loans.
The move follows the enactment of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 earlier this month.
This made the Central Bank the competent authority for the authorisation and supervision of credit servicing firms.
The Central Bank is proposed that all credit servicing firms comply with financial services legislation, including the Central Bank's Consumer Protection Code, the Code of Conduct for Mortgage Arrears, the Code of Conduct for Business Lending to Small and Medium Enterprises and fitness and probity standards.
That will end the current controversial situation where borrowers lose some key consumer protections when their home loan is sold by the bank where they originally took out their mortgage to an unregulated fund.
Under the proposed rules, a credit servicing firm is required to demonstrate that it is in a position to conduct its affairs in a manner that ensures that the best interests of borrowers are protected. These firms also have to have robust governance arrangements in place including effective processes with well defined, transparent and consistent lines of responsibility and adequate controls to monitor compliance with legislative and regulatory requirements.