Credit Review Office has no powers to force banks
Published 01/04/2010 | 14:27
A state body set up to support small businesses refused loans has no powers to force banks to overturn decisions, it was disclosed today.
Firms will also have to pay a minimum of €100 to have their case reviewed.
Finance houses facing lending checks are covered by the National Asset Management Agency (Nama) - Allied Irish Banks, Bank of Ireland, EBS, Anglo Irish Bank and Irish Nationwide.
Despite having no statutory powers Credit Review Office chief John Trethowan claimed that banks would more than likely accept his rulings.
"The Minister has appointed me, and obviously he has a bit of influence at the moment as being the major shareholder (in the banks)," Mr Trethowan said.
The former banker said both AIB and Bank of Ireland have been working to help set the independent Credit Review body up.
"So if the credit reviewers and myself come up with the opinion that a credit is safe, I am pretty sure that the banks will be minded to listen to what I'm saying," he said.
The Irish Small and Medium Enterprises Association said 55pc of businesses had been refused loans in the first three months of the year.
Mark Fielding, chief executive, said the body would help put pressure on the banks.
"It's another piece in the jigsaw. I can't see very many refusals being overturned by the review body," he said.
"But it has the ear of the Minister. I think probably the best we can get out of this is that it is on the shoulder of the banks.
"The banks will have to be very careful to make sure they go through the full rigours when looking at a loan application now."
Mr Trethowan said he had no statutory powers because it was up to the Banks' boards to decide what was placed on their balance books.
The process covers all applications for new loans from €1,000 to €250,000, with a maximum processing charge of €250.
Banks refusing credit who reject the body's opinion will have to explain why they have turned down the loan.
Six expert former bankers, drawn from the ranks of National Irish Bank and Ulster Bank, will act as reviewers.
Mr Trethowan said he would be compiling a report for the Finance Minister every three months and would highlight any bank too strict with its lending.
The Credit Review Office was set up in the wake of December's Budget and is designed to ensure small and medium sized enterprises, as well as sole traders and farmers, can get credit.