General Scheme of Credit Reporting Bill 2012

Transcription

1 General Scheme of Credit Reporting Bill 2012 Table of Contents Joint Committee on Finance, Public Expenditure and Reform Correspondence Item No. 2012/292(b) Part 1 Head 1 Head 2 Head 3 Head 4 Head 5 Head 6 Part 2 Head 7 Head 8 Head 9 Head 10 Head 11 Head 12 Head 13 Head 14 Head 15 Head 16 Head 17 Head 18 Part 3 Head 19 Head 20 Head 21 Head 22 Head 23 Head 24 Preliminary and General Short title and commencement Interpretation Regulations and Orders Laying of Orders and Regulations before Houses of the Oireachtas Expenses Scope and Application of this Act Central Credit Register (CCR) and its Operator Establishment of Central Credit Register Purposes of the Central Credit Register Powers to levy fees and charges Content held on the Central Credit Register Credit Information Subject Identification Fields Data Retention Periods Register of Credit Information Users To whom credit information may be given Purposes of obtaining Credit Information Identity Theft Correction of Credit Information Complaints Credit Information Providers (CIPs) Data Reporting Standards Mandatory Reporting to the Central Credit Register Legacy Data Creditworthiness checks with the Central Credit Register Duties of Credit Information Providers to Credit Information Subjects Duties of Credit Information Providers relating to identity theft information Part 4 Enforcement Head 25 Enforcement Powers of the Central Bank Placeholder (Additional Enforcement Powers) Head 26 Offences Part 5 Head 27 Credit Information Subjects Consumer Rights 1

2 Head 28 Head 29 Part 6 Credit Information Subject Rights Mandatory Declaration of Credit Accountability and Transparency Measures Head 30 Head 31 Head 32 Head 33 Immunity of CBI Accountability of the Central Bank of Ireland Disclosure of Information Confidential Credit Information 2

3 Part 1 Preliminary and General 3

4 Head 1 - Short Title and Commencement Provide that: 1. This Act may be cited as the Credit Reporting Act [2012]. 2. This Act shall come into operation on such day or days as, by order or orders made by the Minister under this section, may be fixed therefore, either generally or with reference to any particular purpose or provision, and different days may be so fixed for different purposes and different provisions. Explanatory Note This is a standard provision regarding the commencement of the Act. It will be necessary to provide for different commencement dates for various parts of the Act. 4

5 Head 2 Interpretation Provide that: Authorised representative means a person who has been selected by the credit information subject to represent his or her interests in relation to credit information held in the CCR, subject to: a. the selected person not being a credit information provider; and b. the credit information subject providing a signed declaration to the CCR operator [on paper or in another durable medium] that the selected person shall be his or her authorised representative. Central Credit Register means a statutory database containing prescribed forms of credit information of credit information subjects [borrowers?]. Central Credit Register operator is the Central Bank of Ireland Closed credit accounts means credit accounts where no further transactions are scheduled to occur or anticipated and the balance is nil Connected Borrowers means two or more credit information subjects that, as a result of the inter-connectedness of their borrowings, are regarded by the creditor as constituting a related credit risk [or would be likely to be so regarded by the creditor if the creditor were aware of their connection]. Reasons giving rise to a relationship between borrowers include: - Shared liability - Shared or dependent income stream - Link through guarantee or common security - Significant influence or control by one borrower to another director [or connected parties as defined in companies acts], manager, owner, significant shareholder - Legal or relational connection Contingent liabilities includes liabilities that are contingent upon the occurrence of an event that affects guarantees and other credit enhancing instruments issued by a credit provider in favour of a customer Credit account means a loan, facility or other similar credit exposure/arrangement resulting from a credit agreement. Credit agreement means an agreement between a credit information provider and a borrower, to include the signature of the borrower, giving effect to a loan, facility or other similar credit exposure/arrangement resulting from a credit application. 5

6 Credit application means a formal application for credit on behalf of a prospective borrower in a manner which fulfils the application process of the credit information provider. [Comment: see above] Credit event means any event that generates an obligation to report information to the CCR by a credit information provider that is not necessarily a default event, i.e., altering the terms and conditions of a loan, a mutually agreed payment holiday, correction of data held on the CCR, etc. Credit information means data on credit information subjects that relates to credit applications and credit agreements and is held on the CCR, such credit information to include credit scores. Credit information provider means any person [or body corporate] which is required to submit credit information to the CCR operator. Without prejudice to the generality of the foregoing the credit information provider may be the person [or body corporate] that a. originates credit under a credit application, or b. purchases or acquires the credit from the person or entity that originates the credit. c. acts as a servicer under an agreement with the originator or purchaser, to manage all the administrative [and/or] regulatory matters relating to the credit. This includes: 1. Banks licensed pursuant to Section 9 of the Central Bank Act, Building Societies authorised to raise funds under the Building Societies Act, Banks licensed pursuant to Section 9 of the Central Bank Act, 1971, and registered as designated credit institutions under Section 14 of the Asset Covered Securities Act, European Credit Institutions authorised in another Member State of the European Economic Area (EEA) and operating in the State either on a branch or a cross-border basis 5. Credit Unions registered by the Central Bank of Ireland pursuant to the Credit Union Act, All entities authorised under Part V of the Central Bank Act, 1997, as amended by the Central Bank and Financial Services Authority of Ireland Act 2004, to carry out retail credit firm and/or home reversion firm business. 7. All moneylenders licensed under Part VIII of the Consumer Credit Act Any person or body corporate that extends credit under the Consumer Credit Act 1995, with regard to: a. Hire Purchase Agreements 6

7 b. Credit-sale agreements as defined within the meaning of the Consumer Credit Act National Asset Management Agency (NAMA) and related entities established by NAMA to fulfil its purposes 10. Local Authorities [and/or] the Housing Agency solely in their capacity as [underwriters and] providers of credit 11. [Other person or body corporate that extends or services credit in a similar manner] Credit Information Subject means a person or entity about whom the credit information collected by a credit information provider relates. Credit Information User means a credit information provider or otherwise a person who has been registered by the CBI as an authorised user of credit information held by the CCR. Creditor means a person who grants credit under a credit agreement in the course of his trade, business or profession and includes a group of such persons. It includes a person or group of persons who obtain a credit obligation from another creditor. Credit Quotation means an informal request made by a credit information subject, orally, on paper or on another durable medium, for details of the terms of credit offered by a credit [information] provider [on a given credit product]. "Credit Report[/Credit File]" means credit information relating to a credit information subject that is disclosed or disclosable by the Central Credit Registry. Credit Score means a numerical or alphanumerical value assigned to a credit information subject s relative risk ranking of not paying their financial obligations in a timely manner, based on some definition of default. Creditworthiness means the ability of a credit information subject to meet financial obligations as they fall due. Creditworthiness check means a credit information user requesting a credit information subject s credit file for the purpose of informing a decision on a credit application or, in certain circumstances, monitoring an outstanding credit. Customer means any person to whom a creditor provides or offers to provide a product or service and any person who requests such a product or service and includes a potential customer and a former customer. Debtor means an individual or a business that owes an outstanding financial obligation, to a creditor originating within the jurisdiction of Ireland pursuant to a credit agreement, and can include: 7

8 Individuals Joint borrowers Sole traders Partnerships/Syndicates Companies Branch Limited Liability Partnerships Trusts Charities and voluntary organisations Industrial and Provident Societies Friendly Societies and any other individual or group that receives credit in a similar manner. Default means a debt obligation that is at least 90 days past due. For standard loans, past due commences [from the close of business/before midnight] on the day a payment under the terms of a loan was due but not paid. For facility type arrangements (overdrafts, credit cards, derivatives, etc), past due commences when a customer has breached the agreed limit; been advised of a limit lower than the current amount outstanding; or taken unauthorised credit. Default event means any situation where an obligation under a credit agreement falls into default. It may also include a number of scenarios which may occur either pre or post 90 days past due, including: Impairment Renegotiated/Restructured/Rescheduled credit agreements Written Off Subject of bankruptcy or any arrangement as set out in the Personal Insolvency Act Identity Theft Notice means a notice which is served upon the CCR operator arising from an actual, alleged or suspected incidence or incidences of identity theft. Minister means the Minister for Finance. Open credit accounts means credit accounts where further transactions are scheduled or anticipated to occur or a liability still exists. Processing means performing automatically logical or arithmetic operations on data and includes: a. extracting any information constituting the data and, 8

9 b. in relation to a data processor, the use by a data controller of data equipment in the possession of the data processor and any other services provided by him for a data controller, but does not include an operation performed solely for the purpose of preparing the text of documents. Register of Credit Information Users means a register held by the CBI for the purpose of determining the eligibility of persons or groups of persons to obtain credit information from the CCR. Explanatory Note This is a standard provision. 9

10 Head 3 Regulations and Orders Provide that a regulation under this Act may contain such incidental, supplementary and consequential provisions as the Minister or the Central Bank of Ireland, as the case may be, consider necessary or expedient. Explanatory Note This Head is a standard provision in relation to the making of regulations and orders. 10

11 Head 4 - Laying of Orders and Regulations Before Houses of the Oireachtas Provide that: Every order and regulation made under this Act by the Minister shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the order or regulation is passed by either such House within the next 21 days on which that House has sat after the order or regulation is laid before it, the order or regulation shall be annulled accordingly but without prejudice to the validity of anything previously done there under. Explanatory Note This Head is a standard provision in relation to laying orders and regulations before the Houses of the Oireachtas. 11

12 Head 5 - Expenses Provide that: The expenses incurred by the Minister in the administration of this Act shall, to such extent as may be sanctioned by the Minister for Public Expenditure and Reform, be paid out of moneys provided by the Oireachtas. Explanatory Note This Head provides for a standard Exchequer funding provision 12

13 Head 6 Scope and Application of Act The reporting obligations in respect of this Act only apply to credit applications and credit agreements originating within the jurisdiction of Ireland. Explanatory Note This Head establishes that the legislation shall only apply to credit applications and credit agreements entered into in Ireland 13

14 Part 2 Central Credit Register and its Operator 14

15 Head 7 Establishment of Central Credit Register (CCR) 1. The CBI shall: a. establish a database known as the Central Credit Register (CCR); b. operate the CCR; and c. own the database and its contents. 2. The CCR shall maintain a database of debtors with information relating to their identity, payments and credit history in order to make such information available to: a. credit providers for the purposes of making more informed lending decisions], b. the CBI for the purpose of discharging its statutory powers and functions c. credit information subjects or authorised representatives so that they are provided with the opportunity to demonstrate a good credit history and to enable them to gauge their creditworthiness, d. wider branches of state, for the purpose of aiding planning in relation to over-indebtedness and other issues of national importance and other registered credit information users, in accordance with Head [13]. 3. The functions of the CCR shall be: a. to build a comprehensive reliable and accurate database of credit histories based on credit applications and credit agreements originating from within the jurisdiction of Ireland, b. to gather relevant data from credit providers, and others where necessary, and legally enforce these requests through sanctions or prosecution where necessary c. to process data received from credit information providers in order to generate credit reports and [,where possible] credit scores to provide to registered credit information users, and d. to provide any other service to registered credit information users in accordance with subhead [5]. 4. The CBI may outsource these functions to a third party operator as it deems necessary. Any third party operator selected shall be bound by a contract entered into by that contractor with the CBI after consultation with the Minister. 5. The CBI, with the consent of the Minister, may make regulations to specify what other credit information services may be provided by the CCR 6. The CBI shall be the designated data controller for the purposes of the Data Protection Acts. 15

16 Explanatory Note Subhead 1 is to oblige the Central Bank to (a) establish a Central Credit Register (CCR), (b) assume responsibility for its operations and (c) to take ownership of the database and the data within. There will be a mandatory requirement on credit information providers to report all credit granted to the CCR, above a low value threshold, by credit providers that hold the vast majority of the outstanding credits, among all credit product types, in this State. The CCR will also provide for an increased coverage of credit types heretofore not captured in this State, including certain contingent liabilities. The overall objective will be to establish a comprehensive, reliable and valuable registry of credit information which will support the achievement of the public policy objectives outlined in Head [8]. The purpose of the CBI owning the database and its contents is to ensure that there remains public control over a database which will hold a very large volume of private data relating to individuals and entities, for reasons of public confidence, and to best ensure continuity of service in the event that a new tender is selected to become the CCR operator. Subhead 2 outlines what the database will collect and who it will provide information to. For clarity, the CCR operator shall not be authorised to supply data to any other Credit Reference Agency operating in the State. Subhead 3 sets out the high level functions of the CCR. It will involve receiving data, processing it and ultimately providing services to those listed in subhead 2, principally credit reports and credit scores. These are standard outputs from credit reporting systems. Credit scores are widely used by credit bureaux and credit registries and are designed to give lenders a fast and accurate prediction of the risk involved in granting credit to a borrower. It can enable lenders to streamline the credit underwriting process and thus provide for a more efficient process for borrowers. Credit scores can be particularly beneficial to smaller credit providers and new entrants to credit markets as such lenders may not have the capacity, either short term or long term, to develop sophisticated internal credit scoring models. In this regard, the provision of credit scoring by the CCR may support diversity and competition in credit markets. Subhead 4 establishes that while the CBI will be responsible for the fulfilment of the functions of the CCR it may outsource the day to day operations to a third party operator as it deems necessary. The nature of this outsourcing would be decided at contract stage and the Minister for Finance will be consulted on the terms of any contract (envisaged to relate to public good clauses). The extent to which the CBI may outsource the functions of the CCR is still being discussed between the CBI and the Minister with a view to providing the CBI with a power to outsource its functions or part thereof under this Bill to one or more third party operators as it deems necessary, appropriate or efficient. 16

17 Subhead 5 provides the flexibility for the CBI with the consent of the Minister for Finance to allow the CCR operator to provide other services not set in this Act. It is envisaged that any such approval would require a positive consideration that additional services would advance one or more of the terms of reference set out in the Interagency Working Group report without unduly having a negative impact on any other terms of reference. Subhead 6 provides clarification in regard to the role of the data controller under the Data Protection Act. 17

18 Head 8 Purpose of the Central Credit Register The purpose of the CCR is to establish a credit reporting system in Ireland that will support: informed lending decisions, supervisory activity of financial institutions including prudential supervision, consumer protection, competition in credit markets, economic development, and the provision of accurate information to Credit Information Users the CBI in the discharge of its statutory functions and exercise of its powers Explanatory Note This subhead provides further details as to the objectives of the CCR. The following sets out rationale and examples of how the CCR could support such objectives. Informed Lending Decisions This is a primary objective of all credit registries as the credit information held on a registry can be used by lenders to effectively address the problem of information asymmetries between borrowers and lenders and thus lead to more informed judgments about credit risk. The procurement of a credit score by lenders, in particular smaller lenders, can further serve to enhance their credit risk management framework and reduce the time and cost associated with the underwriting process and credit decisions. Consumer Protection The establishment of the CCR, with mandatory reporting and creditworthiness checks imposed on lenders, can support consumer protection objectives through better enabling lenders to identify high risk borrowers and better enabling the CBI to identify any poor credit risk management practices of lenders. This can serve to benefit both borrowers who would be vulnerable to default should they be granted credit and wider customers of the lender who may, in compensation, be required to pay higher interest rates should poorly informed decisions lead to high default rates. There are specific provisions within the Heads which extend existing data protection legislation and are designed to enhance consumer protection, e.g. the right of consumers to one free search of their CCR credit file per annum is intended to encourage consumers 18

19 to check their own credit file and ensure the accuracy and completeness of its contents; certain identity theft provisions are intended to protect consumers against the incidence and consequences of identity theft. Competition in Credit Markets Incumbent credit providers in certain credit markets have a distinct advantage over potential new entrants in the form of a customer database (which may be supplemented by internal credit scoring models) and general intelligence of credit markets in Ireland. The establishment of the CCR should serve to increase the contestability of credit markets through providing new credit market entrants with access to data which should be relatively more valuable to them in terms of increasing their capacity to determine borrower risk. Economic Development The establishment of the CCR should serve to enhance the credit risk management practices of lenders and the prudential supervision of the CBI, thus leading to more efficient credit markets, with benefits flowing to the wider economy. Accurate information to support Public Good The establishment of the CCR could serve to enhance the capacity of State bodies in relation to, for example, statistical reporting or research in order to inform policies to combat over-indebtedness. There may be other purposes which advance the public good and which merit access to the CCR by other State bodies. However, there would be an onus on any State body to clearly demonstrate how the public good would be fulfilled by their accessing of the CCR, if it were to receive authorisation for conditional access from the Minister for Finance. This reflects the terms of reference of the Working Group on Credit Histories to provide accurate information to the State (see provision in Head [13]) Support the CBI in the discharge of its statutory duties As with the wider public good, the CCR database will enhance the capacity of the CBI to discharge its statutory functions. Monitoring the quality of lending in the Irish financial system will assist the Bank in its roles as prudential supervisor. It will also enhance the Bank s consumer protection functions. 19

20 Head 9 Powers to levy fees and charges 1. The CBI with the consent of the Minister shall make regulations prescribing the quantum of levies/fees, or a method of calculating the levies/ fees, which the CBI shall be authorised to apply to credit information users. In this regard, the CBI shall have the power to: i. levy credit information users with an annual service levy ii. set transaction based fees to be applied to credit information users in return for the provision of credit information or other authorised services as may be provided for in Head [7]. 2. Regulations under subhead (1) may prescribe different levies, or different methods of calculating levies, of contribution for different credit information users or different classes of such credit information users, according to: a. the nature, scale and complexity of the business of each such registered information user; and b. the capacity of each such credit information user or class to make the proposed contribution. 3. The CBI may, by proceedings brought in a court of competent jurisdiction, recover as a debt an amount of levy payable under regulations enforced under this Act. 4. Should the CBI contract with one or more persons to operate the CCR or part of the CCR, then that contract may provide that such persons may levy or charge fees to credit information users on behalf of the Central Bank, and arrange for the collection of those fees. Explanatory Note Subhead 1 provides the Minister for Finance with the power to raise fees and levies for the purpose of remunerating the CCR operator by way of an annual service fee and transaction based fees for services provided to credit information users. It is considered that this will provide for a transparent and sustainable pricing model. Subhead 2 ensures that the application of service fees by the CCR operator does not disproportionally burden, in particular, smaller credit information users. Subhead 3 enables the CBI to ensure that levies due are paid. Subhead 4 allows that the collection of fees may be carried out on behalf of the CBI, along with other outsourced activities 20

21 Head 10 Content held on the CCR 1. The Central Bank shall have the power to collect and record where applicable the following credit information on the Register in respect of each credit information subject: a. [Credit information subject identification details, [See Head [11]] b. Type of Credit Product (Mortgage, Personal Loan, etc.), c. Details on collateral attached to the credit d. Type of exposure (financial, leasing, commercial, guarantee), e. Size of exposure and currency, f. Term of loan (origination date, initial term of loan, current term of loan if restructured), g. Repayment conditions (frequency and amount of repayment), h. Details concerning the interest rate attached to the credit product, i. Restructuring arrangements, if any, [date, of reschedule, type of reschedule, payments being made, etc.] j. Performance status (performing, arrears, default, etc.), k. The following registered insolvency information in accordance with the Personal Insolvency Act 2012: registered Debt Relief Certificates, Debt Settlement Arrangements and Personal Insolvency Arrangements, l. The following judgments made, in favour of credit information providers, by the Courts: registered debt judgments and bankruptcies (adjudications, discharges, suspension of discharges, annulment of discharges, income payment orders), m. A correction statement or notice of disputed debt attached to credit information [See Head [17]], n. An identity theft notification [See Heads [16] and [24]], o. A credit score, generated by the CCR or by a credit information provider p. the employment status [and] sector of the credit information subject q. Administrative information incidental to credit reporting activities (e.g. a reference number), r. A notification of a conviction of fraudulent offence against a financial service provider by a credit information subject, and s. connected borrower, t. Information prescribed pursuant to sub-head Where the CBI is of the opinion that such credit information would reasonably be sought by a credit provider in order to make an informed lending decision, then it may prescribe with the consent of the Minister additional credit information for the purposes of sub-head The CBI may also record such publicly available credit information as it considers appropriate in relation to credit information subjects, together with analyses of the data set out under sub-head 1. 21

22 Explanatory Note Subhead 1 provides for the minimum content to be recorded and reported by the CCR operator. Subhead 2 gives the CBI with the consent of the Minister the discretion to expand the scope of data coverage for specific reasons subject to applicable data protection laws. Comprehensive data coverage is necessary for an ability to reveal total borrower exposures, which in turn is necessary to support the achievement of the terms of reference of the Inter Agency Group on Credit Histories, in particular: informed lending decisions, supervisory activity of financial institutions including prudential supervision, and competition in credit markets. It should be noted that several high level reports (e.g. Law Reform Commission Report on Personal Debt Management and Debt Enforcement, Cooney Mortgage Arrears Report) made recommendations for a more comprehensive credit reporting system than existed in Ireland. Subhead 3 enables the CCR capture credit information which is in the public domain and to record the analysis of information which is collected under this section. 22

23 Head 11 Credit Information Subject Identification Fields 1. The Central Bank shall have the power to collect the following identification types in respect of any credit information subject who is a natural person acting outside his or her business, trade or profession: a. forename b. surname c. mother s birth surname d. date of birth e. place of birth f. address [to include postal code, where and when available and may include previous address if less than [2] years at current address] g. mobile phone number, where available h. any alias, previously used or other used names (financial information should be linked where a person has other known names or has changed his or her name through deed poll or marriage) 2. The Central Bank shall record the following identification types in respect of any credit information subject who is not a natural person acting outside his or her business, trade or profession: a. details, as provided for in subhead (1) above, of the principals of the entity concerned, b. entity legal name, c. entity business or trading name (if different from legal name) d. entity type, e. entity business address [and telephone number, if any], f. entity registered address if different from business address, g. company registration number (or equivalent where appropriate), h. VAT registration number and other tax registration numbers. 3. The Minister for Finance, on request by the CBI and following consultation with the Data Protection Commissioner and any relevant Minister, may make regulations to provide for additional fields of identity information, related to a personal credit information subject s identity, subject to the Minister being satisfied that such additional information is necessary for the effective operation of the CCR. Explanatory Note Subhead 1 provides a reliable means of borrower identification in respect of natural persons to provide the confidence to credit providers to make lending decisions and to protect borrowers from potential credit fraud. Effective borrower identification verification is recognised as a key component in any successful credit reporting system. 23

24 There are particular challenges in Ireland with regard to the inter-changeability of names (e.g. in English and in Irish forms) and the lack of a postal code system, which may give rise to some confusion of identity where the same names apply. This may apply particularly in rural areas. It is not considered that any of the personal identification fields listed in this subhead are excessively intrusive. The list is designed to provide for a layered approach such that the probability of an identity error occurring is progressively reduced with each identity field added. Data protection considerations will assist in determining the extent to which certain forms of identification can be added to a person s credit file. Subhead 2 sets out the main identification fields to be used for commercial and noncommercial entities for the purpose of providing a reliable means of borrower identification. A layered approach is considered necessary to achieve this. Entity type refers to e.g. sole trader, partnership, company, trust, charity, etc. It is necessary to capture the details of the principals of the business in order to enabling a matching of business and principal to enable the identification to connected borrowers. Subhead 3 provides for a level of flexibility to the CBI to allow the CCR operator to add other borrower identification fields at a later date, subject to prior approval by the Minister for Finance (and other Ministers as necessary) by way of regulation. This is considered necessary as the CBI may, at some point in the future, consider that the current borrower identification fields are insufficient and that other fields may be required to ensure an effective and reliable credit reporting system. If it were desired to use the PPSN it will be necessary to amend social protection legislation in this Act to supplement this regulation making power. 24

25 Head 12 Data Retention Periods 1. The CBI shall retain: a. records relating to all open credit accounts of credit information subjects for the previous [24] months of a credit agreement. b. records of all closed credit accounts of credit information subjects for the final [24] months of the credit agreement for a maximum period of 60 months. c. records of all credit applications for a period of [6] months. d. a record of credit information subjects who have entered into debt relief certificates, debt settlement arrangements and personal insolvency arrangements, for a period of [60] months after the debt arrangement ceases except as provided for in subhead 2. e. a record of credit information subjects who have been declared bankrupt, for a period of [60] months after the bankrupt has been discharged except as provided for in subhead 2,. f. all registered court debt judgments other than bankruptcy for a period of 60 months after the settlement of or discharge from the judgement. 2. The retention timeframes specified in subheads 1(d) to (f) may be reduced by a maximum period of [36] months in cases where debtors are deemed to have cooperated in discharging their debt obligations by way of debt settlement arrangements or personal insolvency arrangements in accordance with the Personal Insolvency Act [2012]. The method for applying this reduction will be defined by the Central Bank of Ireland by regulation. 3. Credit information related to a credit information subject shall be deleted from the CCR on the expiry of the periods set out in subhead 1, but data which is not capable of being related back to the credit information subject may be retained for access by the CBI for an indefinite period on the expiry of the periods set out in subhead The data retained under this sub-head 3 may however identify the creditor or (if different) the credit information provider. Explanatory Note Subhead 1 establishes data retention periods with respect to different situations which can arise for borrowers. The retention time frames set out are consistent with recommendations contained in the Inter Agency Working Group on Credit Histories. Subhead 1a sets out that data pertaining to all open loans will remain on the CCR, on a rolling basis, for 24 months. In order to derive value from the data, it is necessary for 25

26 a. lenders to get a sufficiently complete view of the credit history of borrowers or potential borrowers, b. borrowers to have an added incentive to, for example, recover from an arrears situation, and c. the CCR operator to derive a credit score with a reasonable degree of accuracy. In this regard, it is considered that 24 months is an appropriate period. Subhead 1b establishes that data pertaining to the final 24 months of all closed loans will remain on the CCR for five years.. This is considered necessary for a. lenders to get a sufficiently complete view of the credit history of borrowers or potential borrowers, b. borrowers to have an added incentive to, for example, maintain repayments when a challenging situation arises or recover from an arrears situation, and c. the CCR operator to derive a credit score with a reasonable degree of accuracy. In this regard, it is considered that 60 months is an appropriate period for retention. Subhead 1c provides for a proportionate period of retention for credit applications. Subhead 1d provides that the periods of retention on the CCR pertaining to debt settlement arrangements registered by the Insolvency Service will be [5] years after the discharge of the debt obligations under any Insolvency Service approved plan. This is considered to represent an appropriate balance between the needs of creditors to be informed when making lending decisions and of borrowers to eventually be able to move on without being flagged with an impaired credit record. Subhead 1e provides that the period of retention on the CCR pertaining to bankruptcy debt settlements overseen by the Courts Service will be [5] years after the discharge of the debt obligations. This is considered to represent an appropriate balance between the needs of creditors to be informed when making lending decisions and of borrowers to eventually be able to move on without being flagged with an impaired credit record. Subhead 1f provides for the period of retention on the CCR pertaining to registered court debt judgments other than bankruptcy. This has been aligned with the statutory period of registering judgements to ensure that no situation arises where the CCR doesn t contain record of a judgement that is still registered, which would undermine the usability of the Register Subhead 2 establishes a mechanism to allow for reduced retention periods for borrowers who have been deemed to co-operate with any debt settlement plan registered by the Courts or the Personal Insolvency Service. This is intended to create an incentive for debtors to co-operate from the beginning of the process and to benefit those who have done so. The Interagency Report suggests that for every 12 consecutive months of cooperation the debtor would have their retention periods pared back by 6 months. Subhead 3 ensures the deletion of credit information related to a borrower upon the end of the prescribed period; and to provide the CBI with indefinite access to anonymised 26

27 data for the purposes of pursuing its mandate and statutory obligations], including those related to membership of the European System of Central Banks (ESCB), the Eurosystem, macro and micro prudential supervision and consumer protection. Since credit scoring models depend on significant data history to develop predictive power, having access to the data indefinitely is most useful in developing more reliable, accurate and robust data modelling systems, which increases the capacity of CBI to maintain prudential oversight over the Irish credit market, a key objective of establishing the CCR. Subhead 4 established that anonymised data can still be linked back to institutions; this is necessary to allow macro-level examinations of lending and credit flows, and comparisons between different institutions. 27

28 Head 13 Register of Credit Information Users 1. The CBI shall maintain a register of credit information users authorised to access credit information held on the CCR. 2. Credit information users may only process credit information accessed under this head for the purposes set out in Head [15]. 3. The register of credit information users shall include the CBI (although not a credit information user itself) for purposes of performing its functions and exercising its powers. 4. The register of credit information users shall include the CSO [and the ESRI] for the purpose of statistical analysis or to assist Government planning in relation to over-indebtedness in the State. 5. The Minister for Finance may require the CBI to amend the register of credit information users to include any State body that makes a request to the CBI to obtain credit information contained on the CCR for the purpose of advancing the public good, where the State body concerned provides the Minister for Finance with a written request for such credit information, setting out the reasons why it considers such credit information to be necessary. 6. The CBI may amend the register of credit information users to include credit providers operating in the jurisdiction of Ireland. 7. The CBI may, upon request, amend the register of credit information users to include a credit provider not conducting business in the jurisdiction, subject to it being satisfied that any information obtained by such credit providers in any way under this Act: a. is for the sole purpose of conducting a feasibility study to enter a credit market or credit markets in the State; and b. shall be in such form that it cannot be directly or indirectly related to an identifiable person or undertaking, to such persons and subject to such charges, conditions and restrictions as the CBI [in consultation with the Minister for Finance] may determine [having regard to Government policies in regard to competition in the financial sector and overindebtedness] 8. The register of credit information may be amended to include users to include creditors from other EU Member States seeking information in accordance Head [15.5]. 9. The register of credit information users may be amended by the CBI with the consent of the Minister to include any other publicly-owned credit register who 28

29 meets sufficient data security standards, and where the CBI is satisfied it will be treated securely and that it will not be passed on to a third party without explicit agreement of the CBI. The Minister will approve the amending of the register of credit information users and any further dissemination of information having received advice from the CBI that they are satisfied with regard to the security of the data. 10. The CBI may remove from the register credit information users that no longer carry out business in the jurisdiction of Ireland. 11. In accordance with Head [15.8], credit information users, and credit information subjects with respect to their own records, shall be entitled to receive a record of all credit reports that have been requested or issued in respect of a particular credit information subject for a period of up to 5 years; such requests may be charged fees set by the CBI with the consent of the Minister. Explanatory Note Subhead 1 ensures that only those authorised to do so can access data held on the CCR. Given that the CCR will hold personal and commercially sensitive data on a great number of citizens and businesses in the State it is considered that such a provision is necessary. Subhead 2 ensures that the CBI is enabled to access the CCR for purposes set out in this Act. This includes all aspects of the CBIs mandate and statutory obligations (including prudential supervision, consumer protections and those arising from membership of the Eurosystem). Subhead 3 provides for the CBI to access data for purposes provided for in the Act Subhead 4 utilises the value of data held on the CCR for the purposes of assisting State bodies in the provision of statistical analysis, particularly in the area of overindebtedness. Subhead 5 provides the flexibility to add State bodies to the register of credit information users where such bodies can demonstrate to the Minister for Finance and the CBI that the public good would be advanced where they to access the CCR for a specified purpose. Subhead 6 provides the CBI with the flexibility to add credit providers operating in the State, for example, as part of the CBIs phasing of credit providers and types. Subhead 7 provides the CBI with the flexibility to add credit providers who are currently not operating in the State but who wish to assess the feasibility of entering a credit market or credit markets in the State. This final provision is intended to support the 29

30 achievement of one of the terms of reference of the Credit Histories Working Group to support competition in credit markets. Subhead 8 allows creditors from other EU Member States in accordance with Article 9 of Directive 2008/48/EC (Consumer Credit Directive) as transposed by Statutory Instrument 281/2010, to be added to the register of Credit Information Users Subhead 9 makes provision for the inclusion of other publicly-owned credit registers on the register of users (where publicly-owned means owned and operated by the State), for example to facilitate cross-border information sharing with other European registers. It allows that the CBI and the Minister will have discretion over this, to ensure that any data security concerns can be met. Subhead 10 sets out the grounds for which the CBI may remove persons from the register of credit information users. Subhead 11 enables registered credit information users and credit information subjects with respect to their own records receive information in respect of requests for credit information previously made to the CCR. Fees may be charged 30

31 Head 14 - To Whom Credit Information May Be Given The CBI shall not permit access to information contained in the CCR other than to the bodies outlined below. CCR content shall not be processed other than by: a. the Central Bank b. a person or group of persons listed on the register of credit information users as set out in Head [13]; c. the credit information subject to whom the credit information relates; and d. an authorised representative of the credit information subject to whom the credit information relates Explanatory Note This Head defines the permitted users of credit information held on the CCR. For clarity, there is no provision in the heads for any Credit Reference Agency or Debt Collection Agency to have access to data held by the CCR. Part (a) allows the Central Bank to process the data, which is necessary given its role as data controller. Part (b) provides a greater degree of control and confidence that information is not being disclosed to unauthorised sources. Part (c) is relates to a fundamental right of credit information subjects. Part (d) allows for personal insolvency trustees, agents (e.g. accountants) or trusted relatives/friends of credit information subjects to access the credit file of a credit information subject with his/her authorisation. This is a practical measure designed to facilitate the credit information subject. This part may also include, for example, a foreign creditor who does not wish to be a registered credit information user (e.g. where lending to an Irish resident it is not a regular activity) subject to the same consent provision that applies to any person under this part. 31

32 Head 15 Purposes of Obtaining Credit Information 1. A registered credit information user who is a creditor of the credit information subject shall only process CCR content for the purpose of a. evaluating the risk in granting or extending credit to the credit information subject, b. monitoring the credit file of a credit information subject who is in default on one or more credit agreements to which it is a party [or otherwise has failed to meet terms in the credit agreement], c. evaluating the suitability of the credit information subject to enter into a rescheduled credit agreement, or otherwise change the terms and conditions of the credit agreement where the credit information subject has made a request to the credit information user, on paper or on another durable medium, to alter or to consider altering the terms of the credit agreement [as a result of payment difficulties], d. verifying the details submitted in relation to the provision of credit in a [Standard Financial Statement or similar disclosure]by the credit information subject, where the [Standard Financial Statement or similar disclosure] has been submitted within the previous [6] weeks, or e. evaluating the [eligibility/suitability] of the credit information subject to enter into an arrangement under the Personal Insolvency Act 2012, where the credit information subject, or an authorised representative, has submitted a request to the credit information user, on paper or on another durable medium, to consider such a matter. 2. The Central Bank may provide credit information to a registered credit information user who is a creditor for the purposes of conducting a portfolio analysis; such credit information to be in aggregate and anonymous form and derived solely from the registered credit information users own data 3. The CBI shall have access for the purposes of fulfilling of its statutory purposes and functions as outlined in Head [7.2.b] 4. The CBI shall be authorised to request credit reports of credit information subjects where it is conducting a fitness and probity check in accordance with Part 3 of the Central Bank of Ireland Reform Act 2010 and any relevant codes issued under section 50 of the Act. 5. Data may be provided to creditors from other EU Member States in accordance with Article 9 of Directive 2008/48/EC (Consumer Credit Directive) as transposed by Statutory Instrument 281/ State bodies as approved by the Minister for Finance as provided for in Head [13.5] shall have access to data contained in the CCR. 32

33 7. The CBI may, upon request, provide information to a credit provider not conducting business in the jurisdiction, subject to it being satisfied that any information obtained by such credit providers in any way under this Act: a. is for the sole purpose of conducting a feasibility study to enter a credit market or credit markets in the State; and b. shall be in such form that it cannot be directly or indirectly related to an identifiable person or undertaking, to such persons and subject to such charges, conditions and restrictions as the CBI in consultation with the Minister for Finance may determine having regard to Government policies in regard to competition in the financial sector and overindebtedness. 8. The CCR operator shall keep a record of requests for the issue of credit reports and a record of the credit reports provided. Such records shall be maintained for a period of [5] years and shall be made available to registered credit information users upon request and to credit information subjects with respect to their own records. Such requests may be charged fees set by the CBI with the consent of the Minister. 9. The CBI, after consultation with the Minister, will have the power to define the format and content of any credit reports, credit scores or other data issuing from the CCR. Explanatory Note Subhead 1 sets out the purposes for which lenders can access data held by the CCR. Head 1a enables lenders to access a borrowers credit file in order to better inform a credit decision. This is probably the most basic purpose of a credit registry. Subhead 1b enables lenders to monitor and assess the exposures and credit history of a borrower that has entered into arrears [or that has otherwise failed to meet the terms of a credit agreement]. This is considered important as it will better enable lenders to decide on the most appropriate course of action in dealing with a difficult situation. For example, it could influence whether a lender decides if a loan reschedule is appropriate or not. Subhead 1c enables lenders to monitor and assess the exposures and credit history of a borrower who may be considered to be in a pre-arrears situation and who has made contact with their lender to advise them of current or future difficulties in meeting the terms of a credit agreement. It is considered important to provide lenders with such access as dealing with a problem early very often provides the greatest possibility of resolving it and the provision of such information better enables both lender and borrower to deal with a problem early. 33