Following on from the commencement of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 in July last year (the "Act")(see our previous briefing here), the Central Bank of Ireland (the "CBI") has now published details of its Authorisation Requirements and Standards for Credit Servicing Firms. Both existing credit servicing firms who applied for transitional authorisation under the Act and new firms intending to provide such services will be required to demonstrate to the CBI that they are in a position to meet each of the authorisation requirements and standards.
The CBI has also published a Q&A Document for stakeholders which clarifies that per the Consumer Protection Code 2012 (the "CPC") regulated lenders must notify the CBI immediately and provide affected consumers with at least 2 months' notice before transferring all or part of its loan book covered by the CPC to another person, including where the transferee is an unregulated entity. Where the transferee is an unregulated entity, the CPC requires that the regulated lender also notify the consumer of the regulated entity that will be servicing the loan. In the event that there is a change of credit servicing firm, the existing credit servicing firm must notify the CBI and the consumer in advance.
In the interests of certainty and transparency, the CBI has updated its statutory Codes of Conduct in order to ensure that credit servicing firms are subject to and directly referenced in the Codes. The following Codes have been updated in this regard:
a) Consumer Protection Code 2012;
b) Code of Conduct on Mortgage Arrears 2013;
c) Code of Conduct for Business Lending to Small and Medium Enterprises 2012; and
d) The Minimum Competency Code 2011.
The new credit servicing regime is relevant for market participants on both the buy side and sell side and is something which should be assessed at an early stage in any loan portfolio due diligence or structuring of an entity acquiring relevant loans.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.