One of the main aims of the Credit Reporting Act 2013 (Act), when it was enacted, was to put in place a Central Credit Register (Register) to record information on both consumer and business borrowers. Under the Act, lenders such as regulated financial service providers, NAMA, local authority and other credit providers, must report certain information about borrowers for loans in excess of €500. They must also access the Register when a consumer or business makes an application for a loan in excess of €2,000, in order to ascertain their creditworthiness. Regulations introduced in 2016 prescribed the type of information to be provided and the relevant deadlines for providing that information. The deadline for Phase 1 reporting (consumer loans) is 31 December 2017.
What do lenders have to do – consumer loans?
Lenders, other than local authorities or moneylenders, must:
- Submit monthly reports of consumer personal and credit information to the Central Bank by 31 December 2017 to include credit cards, mortgages, overdrafts and personal loans. Lenders began submitting consumer loan information to the Register on 30 June 2017.
- Inform consumers of this data transfer, and of their rights under the Act.
- Only apply for access to a credit report for purposes specified in the Act. Crucially, the Act does not explicitly allow lenders to use the Register when deciding whether to enforce a debt against a consumer.
- Be careful not to breach confidentiality or data protection laws when collating and submitting this data to the Central Bank. Only information specified by the Act should be submitted.
- Update this information as it changes, reporting to the Central Bank on the consumers’ repayment performance.
- Pay a levy, covering the cost of maintaining the Register.
What does this mean for consumers?
- The Register will contain a “Single Borrower View” of all the loan agreements/applications relating to a consumer i.e. an overview of all the debts owed by the consumer to various lenders.
- The consumer can access this for free once a year. Each access request is recorded on a credit report.
- The Register will also link individuals where one acts as guarantor for another, and will contain credit scores quantifying the consumer’s risk of default.
- Loan information can be retained for five years after completion of the loan. Loan application information can be retained for six months.
- Consumers are allowed to insert a brief statement to the credit report, if they feel details stored on the Register merit explanation.
- Consumers can also amend inaccurate, incomplete or outdated information.
- Consumers must report any suspected impersonation to the lender. The lender, in turn, must report the same suspicion to the consumer.
What happens next?
Once the Register is fully implemented, lenders will be obliged to consult the Register before extending credit over €2,000. Phase 2 of implementing the Register, which will begin on 31 March 2018, will focus on business lending. The Register will reduce the necessity for lenders to rely on private credit ratings agencies when deciding whether to extend credit. Importantly, it is not just regulated lenders who must report to the Register but all providers of credit. Non-regulated credit providers include entities such as NAMA and local authorities.
Lenders need to ensure they are submitting the correct information to the Central Bank, accessing the Register for the right reasons, informing consumers of their rights under the Act and are preparing for Phase 2 which begins in 2018.