Question to the Minister for Finance (Mr. Michael Noonan, TD)
To ask the Minister for Finance if his attention has been drawn to the implications of the Central Bank Act 2013 on bank mediation particularly in relation to personnel who do not deal with clients’ money and simply negotiate with the financial institution on behalf of a stressed borrower; if his further attention has been drawn to the fact that the legislation is treating those persons in a similar way to debt payment companies and consequential compliance and audit associated with this category of mediator; if he will review matters due to the service to consumers that is required for many persons in these difficult financial times; and if he will make a statement on the matter.- Jerry Buttimer.
I have been advised by the Central Bank that following the commencement of the Central Bank (Supervision and Enforcement) Act 2013, the Bank is now responsible for regulating debt management firms. Firms engaged in the provision of debt management services will now require to be authorised by the Central Bank pursuant to Part V of the Central Bank Act 1997 (as amended) (the Act).
The Act defines a “debt management firm” as meaning: “a person who for remuneration provides debt management services to one or more consumers, other than an excepted person”. The Act also defines “debt management services” as meaning:
(a) giving advice about the discharge of debts (in whole or in part), including advice about budgeting in connection with the discharge of debts,
(b) negotiating with a person’s creditors for the discharge of the person’s debts (in whole or in part), or
(c) any similar activity associated with the discharge of debts”.
Firms that provide debt management services may also provide other services and may therefore require to be authorised for several different activities. For example, firms may require to be authorised as money transmission businesses and/or payment institutions, as well as requiring a separate authorisation to provide debt management services, if they make payments on behalf of their clients.
The Central Bank issued a consultation paper on 1 August 2013 in respect of the proposed regulatory regime to apply to debt management firms. The proposals set out a robust set of requirements for what is an important sector, particularly for the clients of debt management firms many of whom struggle to manage their financial commitments and seek advice and assistance from such firms. The consultation paper closed for submissions on 23 September 2013. The Bank is currently considering the submissions received before finalising the proposed Authorisation Requirements & Standards for Debt Management Firms.
The proposals set out requirements in respect of compliance and audit arrangements that seek to ensure an appropriate level of oversight is in place in respect of the services provided by debt management firms to ensure compliance with their regulatory obligations. The Central Bank acknowledges that there is potentially a wide range of entity types that will seek authorisation as debt management firms. The Bank has further advised me that, it proposes to take the nature, scale and complexity of the entity into account when considering applications which will be assessed on a case by case basis. For example, it is not envisaged that a full time compliance officer will be required in every instance. Alternative arrangements put forward by applicants will be considered in this regard.