Credit Servicing Firms – A New Regulatory Framework

Credit servicing firms are now regulated by the Central Bank of Ireland (“Central Bank”) following the entry into effect of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (the “2015 Act”), on 8 July 2015. On 14 July 2015 the Central Bank published a consultation paper in which it outlines its intended approach to the authorisation and on-going regulation of credit servicing firms.

The new regulatory framework for credit servicing firms has clear implications for all those carrying on credit servicing activities with respect to cash loans to individuals and small and medium enterprises ("SMEs"), including primary and master servicers. It also has implications for retail credit firms which were previously exempt from the authorisation requirements under Part V of the Central Bank Act 1997 (“1997 Act”), by virtue of s. 28(a) of that Act (“exempt retail credit firms”). More broadly, the 2015 Act will require the holder of legal title to relevant loans, whether or not it is a regulated financial service provider (“RFSP”) carrying out lending in Ireland, to consider its service agreements in light of the new requirements.

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