Op-ed on No Consent, No Sale Bill 2019

7th April, 2019


The legacy of the global financial crisis still casts a long shadow over those in mortgage arrears in Ireland.  Despite the fact that over 111,000 mortgages have been restructured so that people can stay in their homes, and overall mortgage arrears figures have been on a steady decline for over 5 years, there are still too many people suffering from mortgage distress.


There are a wide range of insolvency services in place. To claim that nothing is being done to support those in distress is to ignore the facts. The Abhaile scheme has issued over 11,000 vouchers for free legal and financial advice and in over 95% of Personal Insolvency Arrangements put in place, Personal Insolvency Practitioners have delivered permanent solutions that keep the homeowner in their home while also returning them to solvency.


We have a strong consumer protection framework that exists through legislation and through the statutory Central Bank Codes that are applicable, regardless of who owns the mortgage.  This is why the Central Bank of Ireland, the European Central Bank (ECB) and I all are of the view that the “No Consent, No Sale Bill 2019” being introduced by Sinn Fein will provide no additional consumer protections to those who hold mortgages.  Indeed, I am convinced that harm will be the only outcome.


This Bill is being introduced by a Party that has never had Ireland’s economic best interests at heart. It is being supported by another (Fianna Fail), who, despite attempts to position themselves as a Party of responsibility, refuse to heed the “grave concerns” of the Governor of the Central Bank as expressed last week at the Oireachtas Finance Committee.


This Bill seeks to introduce a requirement on a lender to seek permission from the borrower before a home loan is sold.  I can understand the political attraction of the Bill; a complex issue, causing worry, with a supposedly simple solution and with a catchy title.


There is a common belief that borrowers whose loans are sold by a bank to a private equity fund are at a disadvantage because of the sale. This is simply untrue.  Last year, the Central Bank carried out a review of the effectiveness of the Code of Conduct on Mortgage Arrears in the context of loan sales and found that it was working effectively.  The review also found that there was no material difference in the level of repossession activity between the entities.  


The No Consent, No Sale Bill 2019 will have a negative effect on the mortgage market. It is likely to increase mortgage interest rates for consumers and lead to a restriction on the ability of banks to access market funding.  As Minister for Finance, I not only have to think of those who are in mortgage difficulty but I also have a responsibility to those future mortgage holders. 


At the request of the Oireachtas Finance Committee, the ECB delivered its Opinion on Monday and their concerns are significant.  The ECB stated that the Bill “is likely to result in additional costs being passed on to other borrowers; it could also result in a significant impact on mortgage pricing and availability, and even an increase in Non-Performing Loans, all of which are likely to impact financial stability, Irish taxpayers, and ultimately the Irish economy.”


I cannot, and will not ignore the dire warnings expressed by the ECB and Central Bank of Ireland. Deputy Doherty, the sponsor of this Bill, and others may not wish to hear what these institutions believe are the negative and serious consequences for mortgage holders, financial stability and the wider economy but we cannot be populist in this regard.  We have to state the facts as they are.  This Bill should not be allowed to proceed.


In the aftermath of the financial crisis, all politicians argued for strong, independent and effective regulators. Now that that objective has been met, the proposal is that we ignore that advice.


What’s more, after consulting with the Office of the Attorney General, I am also convinced that the Bill is unconstitutional as it disproportionally interferes with people’s private property rights.  


This Bill is likely to result in higher mortgage interest rates for customers and to reduce the availability of mortgage lending overall and with stricter conditions.  It will potentially severely restrict Irish banks’ capacity to borrow, particularly in a crisis or in times of need.  There is a strong possibility that there will be increased repossessions by banks as their ability to reduce non-performing loans (NPLs) through sales will be severely reduced.  It will also act as a disincentive to new entrants thinking of coming into the Irish market offering much needed competition. All these consequences cannot be ignored. 


Ireland suffered greatly in the aftermath of the financial crisis and huge personal sacrifices were made. Brexit, while clearly a different type of crisis, has many negative consequences for this country.  At a time of such uncertainty, the financial stability of our banking sector and wider economy is essential. 


The gamble which Deputy Doherty wants the Oireachtas to take in supporting his Bill is simply too high.  The ramifications are simply too serious. This Bill has no redeeming features and I call on Fianna Fail and other Deputies to do the sensible thing and oppose it.