LAST UPDATE | 15 Feb 2024

FINANCE MINISTER MICHAEL McGrath says he will amend the law to close a legal loophole which has resulted in thousands of people whose mortgages are with vulture funds having 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 yesterday, it was confirmed that a “gap” exists which means some homeowners whose loans are with vulture funds do not have the same rights and protections. 

Rowland told the Oireachtas Finance Committee yesterday that “things need to be fixed and they should be fixed, and we’re committed to that”.  

Speaking in the Dáil this afternoon, the finance minister said:  

If a legislative amendment is necessary and possible, it will be brought forward.

McGrath said it is important that all consumers have equal access to the Financial Services and Pensions Ombudsman, adding that his department is engaging with the ombudsman with regard to its interpretation of the legislation.

He said the department’s legal advisers are working to identify “a way forward so that the gap that has been identified is fixed”.

McGrath said that 2015 legislation was strengthened in 2018, after it was brought forward by Fianna Fáil when it Opposition and supported by Sinn Féin.

The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 introduced a new regulatory regime in respect of credit servicing.

The subsequent update to the Act in 2018 widened the scope of ‘credit servicing’ and requires ‘loan owners’ to be authorised and supervised by the Central Bank irrespective of whether or not they had appointed an authorised ‘credit servicing firm’ to service the relevant agreement.

Under the 2018 Act, the Central Bank now also regulates the person who either holds legal title to a loan or has material rights to decide how a portfolio of loans is dealt with.

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Doherty said the loophole must be closed down immediately and called for amendments be made to legislation. 

“These loans should never have been sold to vulture funds but at the very least, the mortgage holders should have the consumer protection the Government promised they would have but which they do not have today,” said the Sinn Féin deputy.

In 2022, the ombudsman received 4,781 complaints and closed 4,647 complaints. During 2022, over 80% of complaints that closed did so within 12 months of the complaint being made, the Department of Finance has confirmed.