Robert Troy (Longford-Westmeath, Fianna Fail)

I thank the Chair and committee for agreeing to take this Bill and facilitating me with this date. Credit Review was established in 2010 to assist viable SMEs and farm businesses in obtaining credit from the participating banks, namely, AIB, Bank of Ireland and PTSB. It provides an appeals mechanism whereby a prospective borrower, whose application for credit has been declined, can apply for a review to the credit review service. The service provides an assessment of the business case for a loan and the borrower’s creditworthiness and makes a recommendation to the lender on that basis. The decision whether to grant a loan will always be a commercial decision, so the lender is not obliged to accept the reviewer’s recommendation but must explain the reasons for this decision. Since its establishment in 2010, the credit reviewers’ recommendations have resulted in banks agreeing to make €86 million in credit available to SMEs and farm businesses.

Credit Review also publishes information for SMEs on credit-related issues and regularly gives expert advice on SME lending by banks to my Department and other stakeholders. The purpose of the Credit Review Bill 2024 I am here to discuss today with the committee is to place the service on a firm statutory basis. There is also provision for an expanded role in the future, should the evolution of the SME credit market justify that.

The Bill will establish the body, to be known as the credit review service, on its own statutory footing. It will replicate matters currently set out in the regulation SI 127 of 2010; codify procedures which have developed as practice over time and will provide a means to extend the lenders subject to Credit Review to other classes of regulated financial service providers if the Minister considers that necessary in light of a future changing market for SME credit. The feedback from the consultations on the Bill with relevant stakeholders was positive.

As far as possible, the Bill seeks to maintain the current practices of Credit Review. The Bill is divided into 38 sections over five Parts. Part 1 deals with preliminary and general matters, including definitions, the prescribing of the loan amounts that are subject to review by the service and the regulation powers. I intend to bring forward a number of technical amendments to Part 1 on Committee Stage to allow for the prescribing of a minimum amount to ensure that credit unions are not immediately in the scope of the Bill, which was always the policy intention; and to ensure that borrowers who receive a credit decision shortly before the establishment day are not prevented from applying for a review of that decision in the transition to the new service.

Part 2 provides for the establishment of the new service and contains the standard provisions for the establishment of a new statutory body to ensure that it complies with appropriate standards of corporate governance. It provides for the designation of an establishment day and specifies the functions of the service and the credit reviewer. It provides for the employment and secondment of staff, as well as accountability to the Minister and committees of the Oireachtas, including through the preparation of specified reports and accounts that are subject to audit by the Comptroller and Auditor General. I intend to bring forward a technical amendment to section 16 to ensure that any dispute in relation to superannuation benefits can be resolved effectively, having regard to the small size of the body.

Part 3 sets out the process by which the service will conduct the review of credit decisions. It provides for the circumstances in which credit decisions will be eligible for review. It also provides for the funding of the service through a combination of application fees and a levy to be paid by the lenders whose credit decisions are subject to review. This will replicate the existing funding model. There is also provision for the service, at the request of the Minister, to undertake a review of the lending practices and policies of lenders whose decisions are subject to review by the service. I am bringing forward a number of technical amendments to Part 3 to ensure that the provisions operate as intended.

Part 4 includes provisions to ensure that the transition from the existing Credit Review to the new service is completed as smoothly as possible with due regard to the rights and interests of all parties concerned.

Part 5 makes technical consequential amendments to other enactments.

In summary, this Bill is largely a technical endeavour to create a stand-alone legislative basis for the credit review service, a body that, since 2010, has provided valuable services to SMEs and farm borrowers. I commend it to the committee and look forward to discussing its provisions with it in greater detail now.