The Central Bank of Ireland recently published feedback from its consultation paper on the planned introduction of a Centralised Credit Register (CCR).

This proposed register will contain details of all loans over €500, issued by all major lending institutions in Ireland. The scheme, which is to be rolled out in phases over the next 2 years, was introduced on foot of the EU/IMF programme of financial support for the country. Its objective is the creation of a centralised database of loans for companies and consumers in an effort to provide transparency for lenders when providing loan facilities. It also aims to protect borrowers from being extended excessive credit.

The Scheme:

The scheme is expected to be fully implemented by the end of December 2017, with all registered lenders obliged to consult the register before issuing loans over €2,000. The scheme excludes specific types of credit such as trade credit, intercompany finance, loans to general government or credit extended by utility companies or retailers.

The Roll Out:

The first phase involves the registration of consumer credit information only. It will begin in September 2016, with the deadline for all reporting by lenders to be completed by 31 March, 2017. Lenders can then enquire about CCR data held on consumers. A second implementation phase will focus on business credit information and is scheduled to become operational in late 2017. From the end of December 2017, lenders will be expected to enquire on the CCR before advancing any credit over €2,000.

While the broad framework of the scheme has been outlined, much of the detail of how it is to be implemented is yet to be formulated. The Central Bank has said it is cognisant of the European Commission’s sister scheme, Anacredit. It plans to harmonise CCR reporting requirements with Anacredit requirements as they emerge. The Central Bank is in the midst of drafting regulations which will govern the scheme, however, it is obliged to consult with the Irish Data Protection Commissioner and Minister for Finance before these are published.

Borrowers will be entitled to see their credit reports and the history of other parties who accessed their records. They may also request correction of any inaccuracies. The Central Bank will have to undertake reasonable steps within specified timelines to determine if it is appropriate to amend a record. Borrowers will also be entitled to one free credit report per year. Any further credit reports will be available for a small fee.

The Central Bank has proposed that the CCR will collect and process PPSN of borrowers to achieve an accurate single borrower view, but its collection will be subject to strict controls to protect the consumer against potential risks. The Central Bank hasn’t detailed what controls will be put in place but it is to be expected that it will set these out in regulations yet to be published.

How can your information be used?

The information from the register may be used by lenders for the purposes of:

• Verifying information provided by borrowers for credit applications;
• Evaluating the risk of lending to a borrower;
• Monitoring defaults in credit agreements by applicants; and
• Evaluating whether to make any debt proposal or arrangement that a borrower may have asked for.

Lenders will be required to keep information about their access to the CCR for five years after such access. The data in the CCR will be held by the Central Bank for up to a maximum of five years.

What has been the response to the scheme?

To date, the Irish Credit Bureau has been the only equivalent register available in Ireland but the general consensus is that it hasn’t been fit for purpose. Set up in 1965, it is owned by a large number of banks and other credit institutions. The principal difficulty is that over the years some institutions didn’t register certain credit agreements.

MABS, the Money Advice and Budgeting Service helps consumers with their loans. It has welcomed the introduction of the CCR. It has been disadvantaged previously in comparison to its counterparts in other jurisdictions by not having access to a central credit register detailing a consumer’s entire debt. This meant it was reliant on lenders responding to repeated requests for verification of individual debts. The CCR, it believes, will help borrowers take control of their unmanageable debt.

Privacy concerns:

Worthy of note is that the CCR may publish and sell general reports, analysis and statistics. It is expected that material produced and sold will be anonymous. This is yet to be determined. The outcome of the consultations with the Data Protection Commissioner on this point should be watched carefully.

Consumer data protection and privacy concerns will need to be the Central Bank’s focus during the consultation process. No individual borrowers should be able to be identified based on the details released.

Conclusion:

The scheme is an admirable initiative. It aims to bring more transparency and oversight to the lending market in Ireland. However it will be important to see the outcome of the Central Bank consultation with the Data Protection Commissioner and Minister for Finance with regards to the protection of borrowers’ anonymity and personal data. It also remains to be seen exactly what regulations will be drawn up to implement the scheme and what further measures might be introduced as the roll out of the scheme progresses.

Ogier Leman advises regulated entities on their obligations pursuant to the Central Bank’s Regulatory and Compliance codes. Speak to our specialist financial services team members Ronan McGoldrick or Laura Daly and our Data Protection specialist Linda Hynes to find out how we can help you.