The Markets in Financial Instruments Bill 2018 has recently been proposed which will require providers of hire purchase credit and other similar loans for the purchase of goods or services from the same entity to report information about these loans to the Central Bank’s Central Credit Register (CCR).
What is the CCR?
The CCR is a secure database established and controlled by the Central Bank of Ireland, under the Credit Reporting Act 2013. It is used to collect and store personal and credit information on both consumer and business borrowers. Under the Act, lenders such as regulated financial service providers, NAMA, local authorities and other credit providers, must report certain information about borrowers for loans in excess of €500. They must also access the Register when an individual consumer or business makes an application for a loan in excess of €2,000, in order to ascertain their creditworthiness.
Hire purchase agreements previously exempted
The Act previously excluded from reporting requirements all credit “facilitating the purchase of goods or services from the person by whom credit is provided”. The aim of this provision was to exclude trade credit from being reported to the CCR but this exclusion was interpreted to mean that hire purchase agreements and personal contract plans were also not caught by the reporting requirements of the Act. This was ultimately considered to be an inadvertent oversight in the drafting of the Act.
The proposed amendment instead excludes ‘trade credit’, but only if:
- the credit provider and person to whom the credit is provided are not consumers;
- the credit provider is not a regulated financial service provider;
- the terms of the credit provide for repayment within six months; and
- the purpose of the credit is to facilitate the purchase of goods or services from the credit provider.
Providers of hire purchase credit and similar loans should prepare for the almost certain eventuality that they will have to report information about these loans to the CCR. The Bill must go through the legislative process before it becomes law so it is unclear when these reporting requirements will come into play but measures could be taken now to begin collecting information on these loans.
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.