Next phase of Irish credit reporting reforms takes effect

The new requirement, introduced under the 2013 Credit Reporting Act ('the Act'), is effective as of 1 October 2019. Lenders are already required to request credit reports on borrowers where an application has been made for other types of lending of at least €2,000.

The Act governs the implementation and operation of Ireland's Central Credit Register, which stores information about loans of €500 or more made to Irish residents or governed by Irish law. The register, which is managed by the Central Bank of Ireland (CBI), is used to generate individual credit reports on borrowers, which can be accessed by borrowers as well as by lenders in certain circumstances.

Implementation of the Central Credit Register and the collection of personal and credit information on loans has taken place on a phased basis since 30 June 2017.

The new requirement for lenders to request a credit report applies where a prospective borrower makes an application for a personal contract plan (PCP) or hire purchase agreement; asset finance product; or similar loan of at least €2,000.

Lenders may request credit reports where they receive applications for loans below this amount, and also in the case of applications to restructure an existing loan or if a borrower has failed to comply with obligations under an existing loan agreement. However, they are not required to do so.

The CBI had previously proposed that lenders would be required to submit information in relation to guarantors to the Central Credit Register from 30 September 2019. This requirement has been delayed until a later date, to be announced by the CBI.

Banking law expert Ann Lalor of Pinsent Masons, the law firm behind Out-Law, said: "It will be important to monitor the commencement date for submission of guarantor information.  In-scope lenders need to be mindful that credit agreements governed by Irish law trigger a requirement to submit borrower and, in due course, guarantor information.  This applies even where the borrower or guarantor are not Irish resident or incorporated".

Since 30 June 2017, regulated financial services providers, the National Asset Management Agency (NAMA) and most other lenders that provide loans for €500 or more to consumers have been required to submit personal and credit information on those loans to the Central Credit Register on a monthly basis. 'Loans' covered by the requirements include credit cards, mortgages, personal loans and overdrafts. Local authorities and moneylenders were exempt from these requirements.

Similar requirements relating to business loans of €500 or more came into force on 31 March 2018, the same date on which the regime was extended to cover local authorities and licensed moneylenders. Since 30 June 2019, lenders have also been required to report information on all hire purchase agreements, including PCPs, asset finance and similar lending to the Central Credit Register.