Wednesday 20 November 2019

Credit Review Office faces overhaul after State audit

Peter Flanagan

THE Government is to conduct a full audit of the Credit Review Office (CRO) before it decides whether to maintain its funding, it has been confirmed.

The review, which was first revealed by the Irish Independent in July, will "examine the operation of the CRO and its dealings with the banks, the borrowers, the media, business representative bodies".

It will also look at the office's relationship with government departments, other public bodies and members of the public, as well as compare its performance to similar bodies in other countries, according to a tender notice published yesterday.

The CRO was set up by then Finance Minister Brian Lenihan in 2009 to act as an arbitrator on loans to small and medium enterprises that have been refused credit by AIB or Bank of Ireland.

Although it cannot legally force a bank to release credit to SMEs, none of the CRO's decisions have been questioned by the banks.

The office, and its head John Trethowan, have been criticised, however, by both small firms' trade groups and lenders.

Both ISME and the Small Firm's Association have rounded on Mr Trethowan for the apparent low numbers of refused loans it has overturned, while banking executives are said to be "incredulous" at Mr Trethowan's June admission that he was "disappointed" with how little the banks were lending.

Although the future of the CRO is not believed to be at risk, the review is expected to lead to an overhaul of how it goes about its business.

The tender calls for "an assessment of whether the CRO provides the appropriate supports to borrowers seeking credit", and the successful applicant will also have to "examine whether the CRO has the appropriate processes, staffing structures and other resources to achieve its objectives".

Last night, Mr Trethowan said the review was needed to benchmark the CRO against its objectives.

"We've been going for a while now, so it is only right that we are looked at by an external auditor.

"It's important that we are sure we are going about things the right way," he added.

The CRO is known to have strong support in government circles, with senior officials believed to be pleased with its performance since it was set up.

The external audit is also expected to open the way for a new influx of employees to join the CRO.

Currently, the CRO is mandated to employ 10 people to review credit applications on a part-time basis. For a variety of reasons, however, that number has dwindled to five or six now.

These assessors are paid an average of €250 per application.

Most cases 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.

Overall the CRO has cost just over €1m since it was set up.

Irish Independent

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