From 30 June 2019, new reporting obligations to the Central Bank of Ireland (CBI) for certain regulated and unregulated lenders engaged in certain activity pursuant to the Credit Reporting Act 2013 as amended (the Act), will come into effect.
In our earlier article, we provided an overview as to the scope of the Act, the new reporting obligations and requirements relevant to those providing ‘credit’ and engaging in hire purchase, PCPs and asset finance to non-bank business borrowers and non-bank leasing businesses pursuant to the Act. We also covered the consequences for non-compliance with the Act and the implications for both lessors / lessees entering into finance leases, in particular, given the new reporting obligations introduced by the Act.
As the effective date for the reporting obligations is fast approaching, businesses providing such ‘credit’ within the meaning of the Act should ensure that it registers with the CBI in a timely manner and that appropriate practices and procedures are established in advance to ensure compliance.
The CCR – an overview
The Act established a central credit information database in Ireland known as the Central Credit Register or the ‘CCR’ operated by the CBI.
The Act requires certain regulated and unregulated lenders including persons providing ‘credit’ to non-bank business borrowers and non-bank leasing businesses to fulfil certain financial services regulatory reporting obligations.
The Markets in Financial Instruments Act 2018 amended the definition of ‘credit’ in the Act, and extended the scope of its application by including hire purchase agreements, personal contract plans and asset financing (such as finance leases) with a contract value of at least €500 and a duration of greater than 6 months. Further detail relating to the reporting obligations and other obligations, to include identification verification under the Act, can be found in our earlier article.
The CBI has approached the practical implementation of the Act on a phased basis and has indicated through guidance published on its website that the reporting obligations in respect of credit applications or credit agreements related to hire purchase, PCPs and asset finance shall commence on 30 June 2019.
The Act also requires a CIP to request a credit report from the CCR if a CIS applies for hire purchase, PCP or asset financing to the value of €2,000 or more, regardless of the level of due diligence carried out by the CIP. The CBI, through guidance published on its website, has indicated that the commencement date for such obligation is 1 October 2019.
Non-compliance / enforcement
The Act gives the CBI powers where it finds that a CIP (other than a regulated financial service provider, NAMA or a local authority) has failed or is failing to adhere to its obligations as a CIP under the Act. In such event, the CBI may direct the CIP to take specified steps to comply with the obligation and furthermore the CBI may apply to the High Court for an order requiring the CIP to comply with any direction it has made.
A CIP who knowingly provides false information to the CCR or uses information accessed from the CCR for a purpose other than one permitted by the Act, commits an offence. If a CIP is found guilty of such an offence, it may be liable (a) on summary conviction to a class A fine (up to €5,000) or imprisonment for a term not exceeding 6 months or both, or (b) on conviction on indictment, to a fine or imprisonment for a term not exceeding 5 years or both.
For businesses providing ‘credit’ to Irish entities, it should consider taking advice as to whether or not it is a ‘CIP’ within the meaning of the Act, whether its current or future business requires registration or other actions, and what actions are required to be compliant with the Act in Ireland.
For further information on the new credit reporting system, its requirements and its implications for aircraft lessors, please see our earlier article, as linked above, and also the Guidance on the Central Credit Register as published by the CBI.