Finance Minister to amend law after thousands whose mortgages sold to vulture funds can’t call on ombudsman for help

Speaking in the Dail this Thursday, Mr McGrath said: “If a legislative amendment is necessary and possible, it will be brought forward.”

This follows an Irish Independent story on Wednesday which highlighted how large numbers of these mortgage holders whose loans were sold to vulture funds are unable to use the ombudsman service to make complaints if they are in dispute over the handling of their loans.

This is the case if their complaints relate to the time before the credit ­servicers, who act for the funds, were registered with the Central Bank.

The credit servicers have only been required to be registered with the Central Bank since 2019 after earlier legislation was tightened.

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

As many as 100,000 owners have had mortgages sold to vulture funds, with credit servicing firms acting on behalf of the funds.

Elizabeth Mc Auley, who is impacted, said: “My complaint with the Financial Services and Pensions Ombudsman was submitted in 2020.”

He stressed that that all consumers must have equal access to the Financial Services and Pensions Ombudsman and told those present that his department is engaging with the ombudsman with regard to its “interpretation of the legislation.”

As many as 100,000 owners have had mortgages sold to vulture funds, with credit servicing firms acting on behalf of the funds.

But it has now emerged that large numbers of these mortgage holders whose loans were sold to vultures are unable to use the ombudsman service to make complaints if they are in dispute over the handling of their loans.

This is the case if their complaints relate to the time before the credit ­servicers, who act for the funds, were registered with the Central Bank.

The credit servicers have only been required to be registered with the Central Bank since 2019 after earlier legislation was tightened.

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

Elizabeth Mc Auley, who is impacted, said: “My complaint with the Financial Services and Pensions Ombudsman was submitted in 2020.”

The ombudsman’s office came back to her last December, saying it cannot investigate the complaint as the firm dealing with her mortgage was not registered until 2019.

Her loan was sold by Danske Bank in 2016.

Ms Mc Auley got into financial difficulties in 2018 and engaged with the credit servicing firm acting for the fund that bought her mortgage.

She filled out a standard financial statement (SFS) under the Mortgage Arrears Resolution Process (MARP).

“I never received an assessment of my SFS. I was in contact with them by email through an account manager who subsequently left the group,” she said.

‘So, no alternative payment schedule was put in place to pay off the arrears’

She subsequently voluntarily sold her home late in 2019 after coming under pressure to do so.

“I was made homeless for a couple of months. I was under severe mental anxiety and depression. I am 58 years of age with no hope of owning my own home again. I am struggling to pay private rent. I saved all my life and never had any other financial difficulties,” Ms Mc Auley added.

She had stopped payments on her mortgage when her mother was dying.

A single woman, she has been forced to relocate to near Roscrea, Co Tipperary.

Ms Mc Auley made a complaint to the Financial Services and Pensions Ombudsman (FSPO) in 2020 about the failure by the fund and its credit servicer agent to consider her SFS and put a plan in place to pay off the arrears.

The ombudsman office came back, in a letter seen by this publication, stating that it could not consider the complaint about the failure to assess the standard financial statement as the “complaint falls outside the jurisdiction of the FSPO to investigate”.

But the firm behind her mortgage was not registered here at the time, so the ombudsman cannot act, it said in a what is a complex letter.

Ms Mc Auley said: “I am sure they are a lot of Irish mortgage holders in exactly the same position as myself without a legal recourse to a vulture fund or its servicer as they were not registered with the Central Bank prior to 2019.”

Last week, the Dáil debated technical amendments to the Financial Services and Pensions Ombudsman Act.

Sinn Féin finance spokesman Pearse Doherty raised the issue of some vulture fund mortgages being excluded from the ombudsman’s services.

“What we have now are thousands of mortgage holders with loans held by vulture funds who simply cannot make a complaint about the conduct of these funds where the conduct occurred ­prior to 2019 or, in many instances, even during 2019,” Mr Doherty said.

“It is a serious issue. The FSPO has made determinations on this issue and they are crystal-clear.

“These are loans that were unfairly sold to vulture funds, which do not now have equal access to the Financial Service Pensions Ombudsman, despite all of the commitments we heard at the time.”

He said this loophole was not being dealt with in the amendments before the Oireachtas at the moment.

Asked if there are any plans to ­rectify the situation, which is excluding ­thousands of vulture fund customers from using the ombudsman’s office, a spokesperson for Finance Minister ­Michael McGrath’s Department of Finance did not directly answer this question.

The spokesperson confirmed: “Where a complaint is made against a provider who was not a regulated financial service provider at the time the conduct complained of is said to have occurred, the FSPO does not have jurisdiction to investigate the conduct which is the subject matter of the complaint against that provider.”

The FSPO said its statutory functions are strictly governed by the provisions of the Financial Services and Pensions Ombudsman Act 2017.

Asked how many vulture mortgages cases it has rejected as firms complained of were not registered at the time the conduct was alleged, the FSPO said it does not have that data.