EU must act to regulate Vulture Funds – Matt Carthy MEP

 

Sinn Féin MEP Matt Carthy this week organised a discussion forum on regulating vulture funds and ensuring the protection of mortgage-holders at the EU level in the European Parliament in Brussels. The forum, entitled, ‘Achieving strong consumer protection in the non-performing loans Directive’, was addressed by experts from BEUC (the European Consumer Organisation) and Finance Watch, and was endorsed by MEPs from across the political spectrum.  The Midlands North West representative outlined that this was part of his work in ensuring that action is taken at EU, as well as national level, to regulate Vulture Funds which are causing havoc in countries like Ireland.

 

The Commission has proposed a three-part package aimed at reducing the level of non-performing loans, including a Regulation on loss provisioning by banks, a Directive on developing a secondary market for NPLs, and a non-binding blueprint for the establishment of nations asset management companies (bad banks).

 

Carthy, a negotiator for the GUE/NGL group on the NPL package, said: “In the interests of financial stability, I welcome the proposal that banks should be required to provision for future losses, but I have major concerns about the promotion of a secondary market for NPLs in the EU. This doesn’t solve the problem but simply moves it into the unregulated shadow banking sector and the opaque and risky realm of securitisation.

 

“It seems to me that the Commission is trying to replicate the Irish model in reducing non-performing loans and impose this model across the EU. That’s why it is so important that Irish representatives highlight the massive problems that we have experienced – from the NAMA debacle to the mass sell-off of distressed loans to unregulated vulture funds. It is not a model to follow but a lesson in what to avoid.

 

“The non-performing loan problem is a legacy of the 2008 financial crisis. This problem was not caused by ordinary people and they should not be forced to bear the brunt of resolving it. The proposal to deepen and expand the secondary market for NPLs aims to promote the role of vulture funds and debt collectors.

 

“Ensuring that strong protection for borrowers is included in this legislation is absolutely crucial. At our forum we heard views on how to achieve this from experts in financial services and consumer protection.

 

“Some of the proposals I want to see included in the Directive are, for example, are to ensure that banks be required to include a mandatory clause in their residential loan contracts that provide the customer with the option of denying the bank the ability to sell on their loan to a third party.

 

“Banks should also be required to provide their customers with the option of purchasing their own debt at a reduced rate – rather than the bank selling this debt to a vulture fund at this same reduced rate.

 

“Vulture funds and debt collectors operating in the EU cannot be given a ‘passport’ to operate in one state but be bound only by the regulatory framework of the state in which they are registered.

 

“I will be heavily focused on inserting the strongest possible protection of the rights of borrowers is included in this package in the coming period, to ensure this proposal does not give free rein to vulture funds across the EU.” ENDS

 

 

Matt Carthy MEP hosted a forum on regulating vulture funds and protecting mortgage holders in the European Parliament, Brussels this week.
Matt Carthy MEP hosted a forum on regulating vulture funds and protecting mortgage holders in the European Parliament, Brussels this week.
EU must act to regulate Vulture Funds – Matt Carthy MEP

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