The following looks briefly at the potential implications, for investment funds authorised and regulated in Ireland, of the establishment of an Irish Credit Register. For further information please contact the Investment Funds team at Walkers.
Through the enactment of the Credit Reporting Act, Ireland is joining the ranks of other nations with public credit registers such as France, Spain, Portugal, Belgium and China, meaning Irish borrowers will have a credit report/rating from the Credit Register. The key intention of the legislation is to establish levels of indebtedness of Irish resident borrowers. The Irish Credit Register is a national register for now, however there have been discussions ongoing at EU-level for some time in relation to the creation of a pan-European central credit register.
Under the new requirements, loans, deferred payments or other forms of financial accommodation owned or originated by Irish lenders: (i) to Irish borrowers; or (ii) under Irish law governed agreements, will generally be required to be reported upon by the lender. Lenders will be required to report on in-scope loans on an ongoing monthly basis from 30 September 2018.
The following types of loans/financial accommodations are cited, in the legislation and guidance issued by the Central Bank, as outside the scope of the reporting requirements:
- credit advanced through alternative means, such as bonds, derivatives or deposits (which we would view as incorporating securities lending arrangements and other forms of securitised debt);
- intra-group lending;
- loans from non-Irish lenders;
- credit without interest or any other charge in any circumstances;
- credit not in excess of €500.
As such these new reporting requirements are not expected to have widespread application for Irish funds, although the Central Bank of Ireland has noted in its AIFMD Q&A document that the activities of a Loan Origination QIAIF may be in scope in so far as they relate to the provision of credit in a form covered by the Credit Reporting Act. Another area of potential application may be where an Irish fund acquires an interest or participation in a loan (for example by way of an assignment of the loan or a participation in the loan by the lender to the fund). In each of these cases, the loans may be in scope where the borrower is Irish resident or the loan agreement is Irish law governed.
The Central Bank has a dedicated webpage for the new requirements which includes a useful 'Lender FAQ' to assist in determining if a lender is in scope of the Credit Reporting Act.
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.