Lenders, bar limited exemptions, have a new reporting obligation to the Central Bank of Ireland (the "Central Bank") pursuant to the Credit Reporting Act 2013 (the "Act"), in order to enable the Central Bank to maintain a Central Credit Register (the "Register"). The Register is intended to ensure transparency and diligence in lending. Both consumers and lenders have access to a credit report, which gives a snapshot of a consumer's lending position at any given time. Phase 1 of implementing the Register began on 30 June 2017 and from this date, information on all consumer loans of €500 or more is to be submitted to the Register.
What do lenders have to do?
Lenders, other than local authorities or moneylenders, must:
- Submit monthly reports of consumer personal and credit information to the Central Bank to include credit cards, mortgages, overdrafts and personal loans.
- Start collating the relevant data and submit it to the Central Bank before 31 December 2017. Much of the information required for the Register should be readily available to lenders from pre-existing credit applications/agreements.
- Inform consumers of this data transfer, and of their rights under the Act.
- Only apply for access to a credit report for purposes specified in the Act. Crucially, the Act does not explicitly allow lenders to use the Register when deciding whether to enforce a debt against a consumer.
- Be careful not to breach confidentiality or data protection laws when collating and submitting this data to the Central Bank. Only information specified by the Act should be submitted.
- Update this information as it changes, reporting to the Central Bank on the consumers' repayment performance.
- Pay a levy, covering the cost of maintaining the Register.
What does this mean for consumers?
- The Register will contain a "Single Borrower View" of all the loan agreements/applications relating to a consumer i.e. an overview of all the debts owed by the consumer to various lenders.
- The consumer can access this for free once a year. Each access request is recorded on a credit report as a footprint.
- The Register will also link individuals where one acts as guarantor for another, and will contain credit scores quantifying the consumer's risk of default.
- Loan information can be retained for 5 years after completion of the loan; loan application information can be retained for 6 months.
- Consumers are allowed to insert a brief statement to the credit report, if they feel details on it merit explanation.
- Consumers can also amend inaccurate, incomplete or outdated information.
- Consumers must report any suspected impersonation to the lender, and the lender in turn must report the same suspicion to the consumer.
What happens next?
Once the Register is fully implemented, lenders will be obliged to consult the Register before extending credit exceeding €2,000 (and for Phase 1, consumer loans, lenders may consult the Register for loan applications of €500 or more). The Register will reduce the necessity for lenders to rely on private credit ratings agencies when deciding whether to extend credit. Phase 2 of implementing the Register will focus on business lending and will begin in 2018. Importantly, it is not just regulated lenders who must report to the Register but all provisions of credit.
Lenders need to ensure they are submitting the correct information to the Central Bank, accessing the Register for the right reasons, informing consumers of their rights under the Act and are preparing for Phase 2 which begins in 2018.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.