- Establishes a database of information called the Central Credit Register (the “Register”); and
- Contains new mandatory requirements to:
- provide information about people and entities seeking credit; and
- carry out searches of the Register.
This Register is the first credit database to have a statutory footing. The Irish Credit Bureau, which up until now has been the main credit-referencing agency in Ireland, does maintain a private database of information supplied by its members. However, it is not a state body but is owned and financed by the ICB members. Whilst the Register shares the aim of other credit-referencing agencies of helping lenders to assess the ability of borrowers to repay any debts, the Credit Reporting Act 2013 goes a step further as credit providers now have two principal obligations. Firstly, they must supply comprehensive information about people and entities to the Register and secondly, they must carry out searches on the Register before approving a credit application. The Register will be operated and monitored by the Central Bank of Ireland.
Clearly, everyone will have some questions about this new legislation.We have set out a chart which details some of the main provisions in the Credit Reporting Act 2013 but firstly let us run through some initial queries. Click on each of the questions below to access our full questions and answers breakdown.
Upon the enactment of this legislation, the Department of Finance stated that the Register “will act as a support to the financial services industry in order to underpin and promote responsible lending and responsible borrowing. It will also aid the supervisory functions of the Central Bank and will enhance consumer protection measures in respect of lending…the introduction of the new credit register will help to support the Irish banking system. Placing a mandatory reporting requirement on credit information providers will help to ensure that the credit register contains robust data”.
The European Commission, ECB and IMF flagged the need for more transparency on credit as part of the financial sector reforms required at the start of the bailout programme. Under the terms of the Credit Reporting Act 2013, banks, NAMA and local authorities are now obliged to provide detailed information about credit applications made by both people and entities in Ireland. The Irish legislature has ensured that an accurate and comprehensive Register will now become part of the future banking culture in Ireland.
Looking at the question of timing, we understand that the Central Bank is currently running a public procurement process in order to find a partner to help with the establishment and operation of the Register and the Central Bank will be in a position to publish the relevant enabling regulations under the Credit Reporting Act 2013 once the operational side of the Register has been finalised with such future partner. This is unlikely to be before 2015.