The Credit Reporting Act 2013 seeks to provide support to the financial services industry by way of further underpinning and promoting responsible lending and borrowing. The Act, which came into effect on 27 January 2014, provides for the establishment, maintenance and operation of a mandatory credit reporting database and checking system owned and regulated by the Central Bank to be known as the “Central Credit Register“(CCR). The main function of the CCR is to serve as verification of accurate, up-to-date information on any borrower(s)/guarantor(s) total overall financial exposure. It will contain information in relation to both consumers and business enterprises. There will be an audit trail in respect of each record, controls on access, measures to mitigate identity theft opportunities and data protection requirements.The Act expressly extends to loans acquired by or issued by NAMA or by local authorities.
A summary of the key elements of the Act include the following:
- Access to Information: Security controls will be in place in relation to accessing information on the CCR.
- Data Protection: the Act expressly authorises the Data Protection Commissioner to deal with complaints from any individual or from a company with an annual turnover of less than €3 million regarding personal data held on the CCR.
- Information: The Act provides for certain controls in relation to accessing information on the CCR in an effort to counter any potential identity theft. It also prescribes the categories of information the Central Bank must maintain on the CCR and the periods for which same are required to be retained.
- Fees: Once every 12 months, consumers are entitled to one free copy of their own record. A fee may be charged, however, for access to information held on the CCR.
- Mandatory Reporting: A comprehensive range of credit information must be provided by credit providers within specified reporting standards.
- Mandatory Credit Checks: Credit providers are obliged to make mandatory credit checks against the CCR for all credit applications above a threshold of €2,000 in order to ascertain creditworthiness (which threshold can be reviewed by the Minister for Finance, if necessary, and may also be potentially revoked without specifying another replacement amount).
- Credit Providers: Credit Providers are required to meet specified standards of reporting when providing credit information with regard to the Mandatory credit checks.
- Where the Central Bank considers any credit information provider is failing to comply with any of its directions under the Act it can make an application to the High Court requiring compliance. The High Court can make any interim or interlocutory order it considers appropriate, including the taking of any ancillary or incidental steps as may be considered appropriate to give full effect to any Order deemed appropriate.
- If the Central Bank considers NAMA or a local authority is failing to comply with any obligation under the Act, it may give notice, with specified reasons, to either the Minister for Finance and/or the Minister for Environment Community and Local Government (as appropriate). Upon receipt of any such notice, the relevant Minister may then direct NAMA or the Local Community to comply with a direction for compliance of obligations from the Central Bank.
- Offences: It is an offence to knowingly provide false or misleading information on the CCR. It is also an offence to knowingly use information to which access has been given under the Act for any purpose other than as specified by the Act. Any person found guilty of an offence under the Act shall be liable to a fine or term of imprisonment of up to 5 years, or both. Where an offence is proved to have been committed under the Act by a body corporate either with the “consent, connivance or neglect of any director, manager, secretary or other officer of the body corporate or any person purporting to act in such a capacity”, that person, as well as the body corporate commits the offence and is liable to be prosecuted against and punished accordingly.
The establishment and continuing governance of a CCR by the Central Bank is a welcome advancement which will hopefully accurately record robust personal and corporate levels of overall indebtedness in a single centralised forum leading to improved responsible lending practices. It should also positively augment the supervisory functions of the Central Bank and further strengthen consumer protection measures generally.