The court of appeal for SMEs
THE Credit Review Office (CRO) has become one of the more high-profile state bodies in recent years, as the question of lending to small and medium enterprises (SMEs) has become a vital part of the business landscape. However, few people understand its work or know how much it costs.
Set up by the last government in December 2009, the CRO adjudicates on credit applications by SMEs that have been rejected by the two pillar banks, AIB and Bank of Ireland.
If a business has its loan application turned down, then, after going through the bank's internal appeals system, it can turn to the CRO to adjudicate.
Headed by former Northern Bank and National Irish Bank executive John Trethowan, the CRO employs two other full-time staff and 10 retired bankers are used to assess loan applications on an ad hoc basis. So far, it has cost just over €1m to run the office since December 2009.
Most of that cost -- €420,000 -- was spent on advertising. The CRO was heavily criticised early on for not making small businesses aware of its existence.
Mr Trethowan has earned a little more than €180,000, while his two full-time staff have taken home the same amount between them.
Perhaps the most controversial part of the CRO process is the use of former bankers to assess the loan applications, leading to accusations that they are "just looking after their old mates in the business".
Eight of the 10 are former Ulster Bank and National Irish Bank employees. Most were regional managers for the banks, working in commercial and agricultural lending.
The two others are former Bank of Ireland people, but they are not allowed adjudicate on loans from that bank.
The assessors are paid an average of €250 per application. Most take a week to 10 days to complete, at a cost of between €500 and €600 an application. Crucially the funding for the CRO comes from the pillar banks, not directly from the State.
So far the CRO has overturned close to 50pc of credit applications it has received but the number of applications has been consistently low. Barely 200 cases have been seen in two years.
Part of that is the cost -- it costs €150 to use the service -- but a large number of queries are resolved before getting to the stage of a formal review.
Small Firms Association head Patricia Callan says that while the CRO was not perfect, it had improved lending to SMEs.
She added: "Before the CRO, there was no formal appeals process in the banks and we have seen a large number of applications from our members that have been denied get overturned internally."