CENTRAL BANK BOSSES have confirmed that a legal loophole exists which means thousands of people whose mortgages were sold to vulture funds have no access to the State’s financial ombudsman service.
Under a heated exchange between Sinn Féin’s Pearse Doherty and the Deputy Governor of the Central Bank Derville Rowland, she confirmed that a “gap” exists which means some homeowners whose loans are with vulture funds do not have the same rights and protections.
The issue, which was reported by The Irish Independent today, was not “foreseen”, according to Rowland.
It means large numbers of these mortgage holders whose loans were sold to vultures are unable to use the ombudsman service to make complaints if they are in dispute over the handling of their loans.
This is the case if their complaints relate to the time before the credit servicers, who act for the funds, were registered with the Central Bank.
Credit servicers were only required to be registered with the Central Bank since 2019 after earlier legislation was introduced.
The ombudsman is an independent and free service that helps resolve complaints from consumers with financial institutions.
Rowland told the Oireachtas Finance Committee today that “things need to be fixed and they should be fixed, and we’re committed to that”.
“I can see that this new decision from the Ombudsman has put at risk an opportunity for customers who have serious, distressing issues, to complain when they haven’t had a satisfactory response from the regulated entity,” she said.
She told the committee that it is “up to the legislature to close the loophole”, stating that it would be a matter for the Attorney General to consider.
Doherty raised concerns as to why a determination by the ombudsman some time ago has not come on the radar of the Central Bank until today.
Doherty pressed Derville Rowland on the regulation of vulture funds and credit services firms, highlighting the lack of consumer protection for non-regulated financial services providers.
Rowland acknowledged the gap in protection and reiterated the Central Bank of Ireland’s commitment to addressing the issue.
Doherty said customers have been “sold a pup” and accused the Central Bank of misleading the committee.
“We’re talking about tens of thousands of people now who do not have access to the financial services ombudsman and the Central Bank has got a key role in terms of consumer protection.
“People look to the Central Bank and look to them for trust and for independent analysis. And when you tell consumers that they are as fully protected as others, people believe that, but it’s not the case,” he added.
The Sinn Féin deputy said there were many performing loans that were sold without consent of the loan owner to vulture funds.
“To add injury to insult” now that they are in the hands of the vulture funds, many of them can’t even complain to the ombudsman, said Doherty.
“What option do they have? Go to court and spent thousands and thousands of your own on legal fees and barristers?” Doherty asked.
Rowland said the Central Bank accepts that the ombudsman has determined it is limited in their jurisdiction because the underlying loan owner from the period of 2015 to 2019 is not designated as a regulated financial service provider.
“That is a new decision. The system was not aware of that determination before now and it’s of the utmost importance that the ombudsman is supported in any way to close that gap,” she said.
“We do absolutely support people being able to make legitimate complaints about their financial services packages, regardless of the complexity, and we would join our voice in any remedy that the ombudsman would wish to see in order to close a gap.
“It is unfortunate that this has come as an issue later in time – that is true – and it is not something that we would wish to see persist,” she added.
Doherty said urgent action because as it stands if one person is with a vulture fund and another has their mortgage with AIB or Bank of Ireland, they can take their complaints to the financial service and pensions ombudsman, while the other cannot, in certain circumstances.
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