EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 12 September 2014 
on the regulation of the business of owning credit 
(CON/2014/69) 
 
Introduction and legal basis 
On 11 August 2014, the European Central Bank (ECB ) received a request from the Irish Department of 
Finance for an opinion on the Consumer Protection on the Sale of Loan Books Bill 2014 (hereinafter the 
‘draft law’). 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and si xth indents of Article 2(1) of Council Decision 
98/415/EC1, as the draft law relates to the Central Bank of Ireland (CBI) and to rules applicable to 
financial institutions insofar as they materially influe nce the stability of financial institutions and markets. 
In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion. 
 1.  Purpose of the draft law 
According to the public co nsultation paper, the draft law seeks to ensure that borrowers whose loans are 
sold by a regulated entity to a currently unregulate d entity continue to have the benefit of the same 
regulatory protections as they had prior to sale, including those protections in various CBI codes, e.g. the Code of Conduct on Mortgage Arrears.  
The ownership of credit, defined in the Central Bank Act 1997 as a ‘cash loan’
2, is to be a newly 
regulated financial activity requiring authorisation by  the CBI. This is to be implemented by extending 
the definition of ‘retail credit firm’ in section 28 of the Act to cover, inter alia, both the business of 
providing credit directly to ‘relevant persons’3 and the business of owning such credit. 
An entity that is a ‘Securitisation Special Purpose Ve hicle’ (SSPV) will be excluded from the effect of 
this expanded definition of ‘retail credit firm’. As proposed, the defin ition of the term ‘SSPV’ appears to 
be based on the definition of Securitisation Special Purpose Entity in Article 4(66) of Regulation (EU) 
No 575/2013 of the European Parliament and of the Council4. However, if the entity carries out ‘loan 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
2  See section 28 of the Central Bank Act 1997.  
3  Defined, with certain exceptions, as ‘natural persons within the State’. 
4  Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements 
for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). 
ECB-PUBLIC  
2 book servicing activities’, such as communicating with borrowers to notify the borrower of changes in 
interest rates or payments due under a loan contract , making decisions in relation to contracts including 
enforcement and changes to interest rates, taking any necessary steps for the purposes of collecting or 
recovering payments due under a contract from the bor rower, or taking any necessary steps for the 
purposes of enforcing the security on a loan, it will not fall within the definition of the term ‘SSPV’ and 
therefore will not benefit from this particular exclus ion. Furthermore, the existing exclusion of ‘regulated 
financial service providers’ from the definition of reta il credit firm will be narro wed. Under the draft law, 
such providers are only excluded if they are authorised by the CBI or another European Economic Area 
regulator ‘to provide or own credit otherwise than  under this Part [of the Central Bank Act 1997]’. 
Transitional provisions will apply to relevant en tities that are currently unregulated while the CBI 
assesses their application for authorisation.  
 
2. Observations  The ECB welcomes the measures to be introduced by the draft law, as they aim to strengthen consumer 
protection and thereby contribute to preserving confidence in the marketplace
5.  
The ECB understands that this newly regulated financ ial activity, requiring authorisation from the CBI, 
will not affect the principle of central bank independen ce, which requires Member States to ensure that 
national central banks have sufficient financial reso urces to perform Eurosystem-related tasks as well as 
their national tasks6. 
 This opinion will be published on the ECB’s website.   
 
Done at Frankfurt am Main, 12 September 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
  
                                                 
5 See Opinion CON/2013/14, paragraph 2. 1. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
6  See the ECB’s Convergence Report 2014, p. 31.