Last December, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2018 was signed into law. It is specifically enacted to bring the activities of the owners of credit books (Vulture Funds) under the control of the Central Bank of Ireland. While this regulation is welcome, it is a pity it comes 10 years after the financial crisis.

The legislation is designed to provide relief to borrowers but unfortunately, it may have come too late for many. How useful it will be in practice, we will have to wait and see. The legislation intends to regulate decision makers in respect of loans. It is likely that all the key decisions for existing loans have already been made and those loans may therefore fall outside the scope of the Act.

Borrowers still caught in this legal trap will have to rely on protection from the Central Bank of Ireland. The Central Bank has been very strong on the topic of ethical behaviour in financial institutions. Here is an area they need to sharply focus on.

There are many examples of borrowers going through an ‘arrears’ process with their bank  and arriving at an agreed ‘solution’, only to find the debt has been sold on and the agreed ‘solution’ is forgotten. How ethical was the behaviour of the bank in agreeing to sell a mortgage when a ‘solution’ had already been agreed?

Was there a conflict of interest in the bank taking this action and selling the loan when it conflicted with the interests of its own customers?

Did the Vulture Fund receive information about the ‘solution’ but chose to ignore it? Is that ethical?

If the deal has been structured so the bank can ‘wash’ the mortgage clean of its Consumer obligations – is that legal? In that respect, does the transaction constitute a form of money laundering?

The Central Bank was initially slow to get involved in the tracker mortgage scandal. It will be interesting to see if it has learned any lessons from that debacle and is quicker to act in relation to Vulture Funds.