Authorisation for Debt Management Firms - CB consultation closes 23 September

The Central Bank of Ireland (‘the Central Bank’) today (30 July 2013) issues a consultation paper on draft standards for the regulation of the debt management sector.



Following the enactment of the Central Bank (Supervision and Enforcement) Act 2013 (‘the Act‘) on 11 Jul 2013 the Central Bank became the competent authority for the regulation and authorisation of debt management firms.



[broken link removed](CP70), sets out draft authorisation requirements and ongoing standards for the debt management sector and is open for submissions from interested parties until 23 September 2013.


Bernard Sheridan, Director of Consumer Protection said: ‘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 these firms. The standards drawn up are reasonable, and have been informed by assessing the experiences of the debt management sectors in other jurisdictions and evaluating relevant standards internationally.



Response to Consultation on the Authorisation Requirements and Standards for Debt Management Firms”. Please make your submissions electronically by email to debtmanagementservices@centralbank.ie



Friends, community groups, politicians, etc will be able to continue to give this advice, as long as they don't charge for it.

10.5 Debt Management Firm means a person who for remuneration provides debt management services to one or more consumers, other than an excepted person;
10.6 Debt Management Services means—
(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;

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Excepted persons include

(a) any charitable organisation within the meaning of section 2(1) of the Charities Act 2009,
(b) the Money Advice and Budgeting Service,
(c) any licensed bank, building society, credit union or friendly society,
(d) a barrister, solicitor or accountant who provides debt management services only in an incidental manner and is subject to regulation by a professional body,
(e) a person who is a party to the Protocol for Independent Advice to Borrowers Availing of Long Term Mortgage Forbearance made on 2 August 2012 (as amended from time to time) and provides advice in accordance with that Protocol,
(f) the Insolvency Service of Ireland, any approved intermediary authorised under section 47 of the Personal Insolvency Act 2012 acting as such or any personal insolvency practitioner authorised under Chapter 1 of Part 5 of that Act carrying on practice as such,
(g) personal representatives (within the meaning of section 3 of the Succession Act 1965),
(h) trustees of a trust, other than a trust which is established to provide debt management services,
(i) the Bank,
(j) An Post,
(k) the National Asset Management Agency,
(l) the National Treasury Management Agency,
(m) the National Consumer Agency, and
(n) any other person constituted, or holding office, under an enactment or funded (in whole or in part) by a Minister of the Government.

It is proposed that the qualification of ‘Qualified Financial Adviser’ (Institute of Bankers School of Professional Finance, LIA and The Insurance Institute of Ireland) will be included in the MCC as a recognised qualification for persons exercising certain functions in a debt management firm and the Central Bank welcomes the views of interested parties on any other qualifications that might be considered appropriate and the reasons why those qualifications might be appropriate.
It is proposed that there will be a transitional period of four years from the commencement of the 2013 Act to allow all persons who are seeking authorisation as a debt management firm to obtain a relevant qualification.

10.3 Consumer, for the purposes of Part V means (a) an individual acting otherwise than in the course of business, or (b) a micro enterprise within the meaning given by Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium sized enterprises;

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So if I borrow €10m for an investment property, I am a consumer?

My initial views on this

1) It is important to protect people with mortgage debt and consumer debt from cowboys.
2) We have to be careful not to over-regulate.
3) Do we need to regulate the provision of advice to people with big property debts? I don't think so.
4) Some people give this advice on a part-time basis e.g. retired bankers. Provision should be made for them to continue in business. There should be some exemption for people who earn less than €30,000 in fees per year.

The deadline for making submissions is approaching.

Is anyone planning to make a submission?

Brendan.

Some Debt Management Companies are now moving to N.Ire.The strictures of the Central Bank are too onerous. The UK Authorities consider their systems to be robust enough to control (cowboys)
These companies can now freely and fairly and legally operate in ROI from a N Ire base.
Looking at Central Banks chosen ones , I see the usual suspects being (permitted),

What is happening is that honest Debt Companies are being forced to (move) to N Ire. Again as with Insolvency it will only leave the Big Boys.

Can I suggest ,run mirror legislation as is in the UK?

Brendan Burgess said:

It is proposed that the qualification of ‘Qualified Financial Adviser’ (Institute of Bankers School of Professional Finance, LIA and The Insurance Institute of Ireland) will be included in the MCC as a recognised qualification for persons exercising certain functions in a debt management firm and the Central Bank welcomes the views of interested parties on any other qualifications that might be considered appropriate and the reasons why those qualifications might be appropriate.

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What are the certain functions they mention? I read the document and it said .....there are "certain minimum competency standards with which persons falling within its scope must comply when performing controlled functions or pre approval controlled functions" but I don't know what those functions are.

I presume that they mean giving the actual debt advice or managing the company.

It wouldn't apply to the receptionist for example.

Brendan Burgess said:

I presume that they mean giving the actual debt advice or managing the company.

It wouldn't apply to the receptionist for example.

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I have a LIA qualification but a family member of mine has years of experience with dealing with banks and giving advice about debt but no qualification so looks like he will have to stop doing this, we had presumed that if at least one person had the qualification in the company then that would be enough.

tajune said:

I have a LIA qualification but a family member of mine has years of experience with dealing with banks and giving advice about debt but no qualification so looks like he will have to stop doing this, we had presumed that if at least one person had the qualification in the company then that would be enough.

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Why not make a submission on the issue?