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Friday 30 September 2016

Banks must submit details next year to Central Bank on every loan and mortgage issued

Charlie Weston, Personal Finance Editor

Published 22/09/2016 | 17:58

The Central Bank headquarters in Dublin
The Central Bank headquarters in Dublin

BANKS and other lenders will have to submit details to the Central Bank by next summer on every loan and mortgage issued to consumers and other borrowers.

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The move is part of plans to roll out a new central register of all debts in a bid to prevent another credit bubble.

Consumers have been assured by the Central Bank that their data will be subjected to “strict security and data protection protocols”.

Regulations setting out how the new register will operate have now been published by the Central Bank.

Setting up a central credit register was one of the financial sector reforms demanded by the European Commission, European Central Bank and International Monetary Fund at the start of the bailout programme in 2010.

This is so banks are aware if a borrower has loans from various different lenders.

During the boom developers were taking out loans from different banks, with banks sometimes unaware of the scale of the loans given out by other lenders to developer clients.

The register was supposed to be in operation by now, but various deadlines have been missed.

Now the Central Bank says the collection of loan data from lenders will be implemented on a phased basis.

The first phase will focus on consumer lending, and the second on lending to businesses.

All lenders will have to submit data on consumer loans and mortgages by the end of 2017.

The Central Bank said it would notify lenders shortly of their obligations under the regulations.

The bank said the register was expected to produce credit reports for individual lenders and borrowers after December 2017.

Credit reports will show a profile of a borrower’s credit accounts across all lenders, including their repayment history, the number of payments in arrears, and a record of inquiries made by lenders.

Borrowers will be able to request their own credit report free of charge from the Central Bank, once every year.

Central Bank director of resolution and corporate affairs John Coyle said the regulations were published after consultation with the Data Protection Commissioner and the Department of Finance, and a public consultation in 2015.

“The development of the central credit register is an important financial sector reform, contributing to financial stability and consumer protection.”

He said the register will match the personal and credit information received from lenders to create a complete credit report, containing all the loans relating to an individual borrower.

This will facilitate enhanced creditworthiness assessments and responsible lending.

Mr Coyle said the database would help the Central Bank’s supervision functions and provide it with better insights into financial markets.

“Under the Data Protection Acts, the Central Bank will act as data controller and will ensure strict security and data protection protocols are in place to safeguard borrowers’ information submitted by lenders to the register,” he added.

There will also be an awareness campaign to provide information on the register to the public.

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