As the phasing-in of the requirements for lenders to supply data to the Central Bank for its new Central Credit Register (the Register) will begin in 2017, alternative lenders should be aware of key timelines and the steps they should be taking to prepare for credit reporting.
On 22 September 2016 the Central Bank published Regulations under the Credit Reporting Act 2013 governing the operation of the Register. Our February 2016 Client Briefing and our September 2016 Client Briefing provide further details on the expected operation of the Register.
PURPOSE OF THE REGISTER
The Register will be will be managed by the Central Bank and operated by CRIF Ireland Limited in accordance with the provisions of the Act and the Regulations. It will hold information about credit applications, credit agreements and the parties to those agreements. In-scope lenders will be required to report data on those applications and agreements, and borrowers will be able to check their credit records.
Our September 2016 Client Briefing sets out further detail on in-scope lenders, in-scope credit, lender obligations and borrower rights. It is important to note that the Act and all Regulations thereunder apply not just to regulated lenders such as banks, but also to unregulated lenders and the purchasers of loans.
DATA COLLECTION PHASES
The collection of loan data will be implemented on a phased basis, with Phase One focusing on lending to consumers (individuals acting for personal purposes) and Phase Two focusing on lending to businesses (i.e. sole traders, companies, partnerships, clubs, associations etc.)
PHASE ONE: CONSUMER LENDING
The Regulations provide that, in Phase One, lenders must start by providing personal and credit information relating to consumer credit agreements in force on 30 June 2017 to the Register. Lenders must provide that information between 30 June 2017 and 31 December 2017, although the Regulations allow the Central Bank to specify later dates. Thereafter, information must be provided at such intervals as the Central Bank specifies. Provided that sufficient data of acceptable quality has been received, lenders may be allowed to check the Register when considering consumer credit applications from 31 December 2017 onwards and must be in a position to check the Register by 30 September 2018.
PHASE TWO: BUSINESS LENDING
In Phase Two, the Regulations require lenders to start by supplying personal and credit information in relation to business credit agreements in force on 30 June 2017 to the Register. Under the Regulations, that information must be provided between 30 June 2017 and 30 September 2018. However, as with Phase One, the Central Bank is allowed to specify later dates and the reporting obligation under Phase Two will not begin until 31 March 2018. Lenders may check the Register from 30 September 2018 onwards, and must be in a position to do so no later than 31 March 2019.
For many alternative lenders who are not lending to consumers, Phase Two will be the more relevant timeline. While Phase Two will not commence until 2018, it is important in the interim that alternative lenders:
assess the lending they undertake to verify that Phase One does not apply to them; put in place internal systems, policies and procedures to ensure compliance with the Act and the Regulations; » prepare appropriate customer communications before the Register becomes operational; complete any Credit Information Provider Profile that they may receive from the Central Bank; and register with the dedicated website (www.centralcreditregister.ie) for in- scope lenders.
It is also expected that the Central Bank will publish further regulations which will include details of any levy to be paid by lenders to fund the costs of the Register, and fees for accessing the Register. It will also be important to look out for any guidance the Central Bank issues on whether the obligation to report can be delegated to a third party servicer or facility agent. This would help to streamline, and likely make more consistent and accurate, the reporting of syndicated, club and senior/mezzanine lending transactions. If this is permitted, the facility agent may seek to charge additional fees and your contract with them will need to be carefully reviewed to check your contractual rights and obligations.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.