A recent amendment to the Credit Reporting Act 2013 has extended its scope to include hire purchase and similar finance products, including personal contract plans. In-scope providers of these products will need to ensure that their compliance systems have been updated to address this new obligation.
What was amended?
The definition of “credit” in the Credit Reporting Act 2013 (the “Act”) is very broad and was intended to capture most forms of credit that could be provided to a borrower with an Irish address. That definition does, however, include some express exceptions which until recently had the effect of excluding consumer and non-consumer hire purchase and similar arrangements, including personal contract plans (“HP Arrangements”) from the requirement to report them to the central credit register. The Central Bank of Ireland (“CBI”) indicated from an early stage that this had not been intended and that it was seeking a legislative amendment to bring HP Arrangements into scope as reportable credit.
Following that amendment (effective 29 October 2018), the relevant parts of the definition of “credit” now read: ‘"credit" includes a loan, deferred payment or other form of financial accommodation, other than any provided…(f) in the form of trade credit…’ (emphasis added).
“Trade credit” is a new (and quite involved) concept. Broadly summarised, subject to some exceptions, “trade credit” is any credit provided by one business party to another, for the purpose of facilitating the purchase of goods or services, where the credit is required to be repaid within six months. A common example would be 30-days credit provided on an invoice from a wholesale supplier to a business.
What should providers of HP Arrangements do?
If you are the provider of a HP Arrangement you should first assess whether you are in scope of the Act and within scope of the CBI’s current reporting requirements. As the CBI is introducing the central credit register in phases, the reporting requirements for consumer and non-consumer HP Arrangements may differ.
Assuming you are required to report, the next step will be to review and update your business processes to ensure compliance with the requirements of the Act and to begin reporting of in-scope HP Arrangements. Further details on these requirements and credit reporting generally are available in our previous client briefings, including those available here and here.
The requirements of the Act, implementing statutory regulations and the CBI’s extensive guidance can be challenging to negotiate. If you would like advice on this area, please do not hesitate to get in touch with any of the below-named persons, each of whom has extensive experience advising clients in this area.