Extending credit facilities comes with its own set of unique challenges. To maintain balance and sanctity in the economy, all credit facilities must be analyzed meticulously. Economies fail when there is no intervention by regulators, as overdue credit balances turn into bad loans and recovering such an amount becomes a herculean task. A notorious example of this occurred during the U.S. financial crisis of 2008, when governing bodies failed to exercise restraint and analyze in-depth the credit history of borrowers.
Credit history, as a component of credit managing, is arguably the most important constituent for financial institutions that are on the lending side to be able to gauge the creditworthiness of a potential borrower. It also assists them in making efficient risk management decisions across a broad range of financial operations. Moreover, central banks, benefit from the use of credit history data when deciphering underlying credit trends and making macroeconomic decisions. Apart from submitting regulatory reports, hedge funds engaged in lending operations must also report credit data to their respective credit authorities.
The Irish Central Credit Register
Under the Credit Reporting Act 2013, the Central Bank of Ireland established the Irish Central Credit Register (CCR). It is a centralized database that collects and stores information about loans including credit cards, overdrafts, personal loans, mortgages, etc. It helps lenders access the credit history of a potential borrower and enables the Central Government to perform its duties effectively.
Key Dates and Developments:
Since 30 June 2017, lenders – including banks, credit unions and any other lender that provide consumer loans for €500 or more – must submit personal and credit information on those loans to the Central Credit Register.
On 31 March 2018, the regulatory reporting expanded to licensed moneylenders and local authorities. Business loans were also included on the list.
Since 30 June 2019, lenders must submit information on hire purchase, personal contract plans (PCP) and asset finance loans to the Central Credit Register.
How it Works
The CCR receives information from lenders every month on loans of €500 or more. Individual credit reports on borrowers are generated using this information which they and, in certain cases, lenders can view. In fact, borrowers can obtain a copy of their credit report to check their own data and cross-verify the credit information that their lenders have provided on their loans. It is important to note that the CCR does not score or grade reports, and it also does not decide whether a loan is approved – that is left to the prerogative of the lender.
How Data is Used
- Building Credit Reports: The information is securely maintained on the CCR and used to generate credit reports.
- Central Bank: Any anonymized information maintained on the CCR may be used by the Central Bank to discharge its duties effectively.
- Central Statistics Office: This data is used by the Central Statistics Office in their various statistical surveys of income, consumption and household wealth.
- Other Legislative Provisions: When it is deemed essential, the Central Bank may provide information to various governmental agencies and law enforcement entities.
Individual hedge funds dealing in extended credit facilities must report to the central credit authority and fall under the purview of the Credit Reporting Act 2013. When one applies for a loan of €2,000 or more, lenders must request a copy of the credit report. If the loan application is for less than €2,000, they may seek a copy of the report if the borrower:
- Has requested a restructure of an existing loan.
- Has arrears on an existing loan.
- Violates their credit card or overdraft limit.
A Simplified View of the CCR Workflow
How IVP can Help
IVP’s Regulatory Reporting solution, with its in-built automated processes, collates the relevant data required to be reported and organizes it in a systematic and categorized fashion to develop regulatory reports. The solution creates a final report in an Excel that can be submitted directly to the regulator by the user, thus ensuring a fast yet efficient data reporting experience.
Maximize regulatory reporting efficiency with automation. This solution handles regulatory filings, manages threshold breach disclosures, and integrates seamlessly with enterprise systems and fund admins.
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