Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I move amendment No. 1:

In page 6, subsection (1), line 2, to delete “accommodation;” and substitute the following:“accommodation, other than any provided--
(a) by one credit institution to another,
(b) to any entity classified within general government in relation to the State within the meaning given by the Fiscal Responsibility Act 2012, the government of any other country or territory or any international organisation,
(c) by a company to a related undertaking of the company,
(d) by a person who does not provide credit except to the person's employees,
(e) in connection with the provision of a utility or other service on a continuing basis,
(f) for facilitating the purchase of goods or services from the person by whom the credit is provided, or
(g) without any requirement to pay interest or any other charge (in any circumstances);”.

The proposed amendment to the definition of the word "credit" provides more clarity on the scope of the legislation. I have included the following exclusions in the definition. Subsection (1)(a) aims to exclude interbank lending, the majority of which is extremely short term, including durations of less than one week. A significant proportion of this lending takes place overnight and its purpose is to manage liquidity flows. It is not true lending in the sense of creating an exposure that is repaid over a period. It is considered highly liquid for reporting purposes and is captured through existing regulatory reporting. Attempting to capture this form of lending would create a significant operational burden for credit information providers, given the frequency of mandatory checks, associated costs and the delays caused by the need for such checks. Delays are particularly problematic when the lending is for short-term liquidity purposes.

Subsection (1)(b) aims to exclude from the register State borrowings or lending to international organisations defined in section 186B of the Social Welfare Consolidation Act 2005.

Subsection (1)(c) aims to exclude intra-group lending, for example, a parent company in a group lending money to a subsidiary. The register is unlikely to benefit from information of this kind. Many large firms will have a finance arm that handles most of the financial dealings for a company. The finance arm will be the arm that takes on all borrowings and lends the money internally to other branches of the firm. Trying to deal with these complex set-ups within the register would involve significant cost for the parent and subsidiary companies concerned for a minimal gain of information.

Subsection (1)(d) is intended to exclude any financial accommodation offered by an employer such as a wage advance from being captured for the register. Although this information could be useful, the cost and resources required to monitor every firm that offers any financial accommodation to its employees and mandate reporting from such firms would be highly significant. On balance, the information would not be sufficiently valuable to warrant this. Where credit providers cannot rely on this exclusion, they must report on all loans of more than €2,000 they provide for employees.

Subsection (1)(e) aims to exclude utilities from the register. The possibility of including utilities in the register was examined by the inter-agency working group and not considered necessary at this point. The group recommended that the inclusion of additional sources be considered by the Central Bank of Ireland after the initial implementation of the register in consultation with the stakeholders, including the Office of the Data Protection Commissioner.

Section 1(f) is intended to exclude trade credit where financial accommodation is being extended for a short period from one business to another. This is distinct from financing arrangements where credit is extended in exchange for repayment with interest over a period of time. Late payments are likely to be short-term and are most likely to take place with ongoing customers over a period of time. For example, manufacturers of goods will have trade credit accounts for retainers of those goods, which will be part of the business model in a way that one-off credit or financing is not. Section 1(g) aims to cover ad hocinterest-free arrangements. If credit is offered without interest or charges, it is likely to be less formal and for a shorter term. This section should also mean that informal loans between friends and families are excluded if no interest is applied.