Wednesday, 11 December 2013
Credit Reporting Bill 2012: Second Stage
We have had a very constructive debate on the importance of the Credit Reporting Bill, which will create the legislative framework for a central repository of credit information to be known as the central credit register. The register will go some way to resolving what were identified as weaknesses in the Irish financial services industry by providing a tool which supports responsible borrowing and lending. It will assist the Central Bank in its supervisory role and augment levels of consumer protection in respect of lending. I thank all the Senators for their constructive input to this debate and the Fianna Fáil and Sinn Féin parties who supported the Bill in the Dáil and the Seanad. I am grateful that we have had quite a number of very interesting contributions. A number of Senators, including Senator Quinn, intend to bring amendments forward on Committee Stage. I welcome their helpful contributions and discussion of the Bill and will be happy to discuss their proposed amendments on Committee Stage.
I will respond to a number of issues, proposals and queries that were raised during today's debate. Senator Darragh O'Brien and others asked when the register will come into operation. The Central Bank intends to take a phased approach to the establishment and development of the register and has suggested that the indicative timeframe for the implementation phase would be over 2015 to 2016. It is anticipated that 2014 and much of 2015 will be spent in procuring, developing and testing the technical solutions in partnership with all relevant stakeholders with data being supplied on a phased basis over the course of late 2015 and into 2016.
The indicative timetable will depend on and be influenced by the successful enactment of the Credit Reporting Bill by the end of 2013 and subsequent agreement on secondary legislation in 2014. It will also depend on the successful development of a technical solution, which is likely to involve a substantial public procurement process and the capacity of credit information providers to meet the significant operational challenges within a tight timeframe and within the context of other competing demands.
A number of Senators raised the question of control of the data to be held on the register. This is why we have provided for strong controls in section 16. This section outlines the purpose for which information on the register can be used, which would preclude the use of the information on the register by credit providers for marketing purposes, as is feared by some Senators. Data protection concerns have been, and continue to be, of utmost importance during the development of this legislation. It is important to note that the Data Protection Commissioner has contributed to the development of the Bill, ensuring that the rights of consumers are protected at all times.
Regarding the thresholds set by the Bill in sections 11 and 14, which Senator Darragh O'Brien raised, we will consider the contributions made by all Senators. It is very important that we correctly strike a balance between trying to prevent a lender from avoiding having a check or report to the register. I would not like to make it overly bureaucratic by setting the threshold too low. I am satisfied that I have been provided with sufficient power to amend the thresholds, if necessary. A concern was raised in the Dáil and here again today on the threshold being pitched too low regarding moneylenders. Senator Reilly raised this issue. It is anticipated that banks and credit unions would be the first credit information providers to be phased in under section 11, which will place on them an obligation to provide information to the register and to access information on the register in certain circumstances.
I am satisfied that the threshold is satisfactory. I have the power to amend the threshold following consultation with the Central Bank having regard to the consumer price index, implications for the effective and efficient operation of the register and the effect on credit information providers and credit information subjects. It would be more appropriate to determine if the threshold should be changed after a period of practical operation of the credit register following the phasing in of moneylenders. The register will be capable of providing statistics that could be examined by the Central Bank to assist it in its supervisory function. The Central Bank would be in a position to determine whether the behaviour of a particular credit information provider illustrated the need to change the threshold or whether legislation is required to provide for a threshold specific to a particular credit information provider. This is not the vehicle primarily to regulate moneylenders. It is a register for capturing information to support credit and lending decisions and prudential supervision of the financial services industry.
Senator Darragh O'Brien suggested a widespread programme of consumer education should be conducted. I agree and believe it would benefit the consumer, particularly as the Senators have highlighted the lack of awareness of the ability of consumer credit information. I agree that it is very important that citizens be made aware of the register and what implications it will have. It is equally important for consumers to know they have the ability to access a free copy of their credit report each year. Consumer awareness and education are imperative for the legislation to have the positive effect it is intended to have.
The Central Bank will carry out a public awareness campaign during which it will highlight the opportunity for individuals to avail of a free copy of their credit report each year. The National Consumer Agency has indicated that it is keen to engage in this important consumer issue. In response to Senator Darragh O'Brien's question about a free report each year, this is provided and we will help to clarify issues and corrections that need to be made on Committee Stage.
This represents an opportunity to develop a responsible reporting structure which will benefit both borrower and lender and ensure lenders are in a position to make informed lending decisions. The register will help support our continued policy to combat the overall indebtedness of this country. In response to questions by Senators Michael D'Arcy and Gilroy on the role of the Central Bank where evidence of over-indebtedness is available, the register will be capable of providing significant useful information. The Central Bank will have the power to use this information for its supervisory functions.
The consumer credit regulations and the mortgage credit directive, which was voted on by the European Parliament, provides for creditworthiness assessments. The Central Bank has and will have a role in regulating financial service providers and ensuring they adhere to the requirements of the various pieces of legislation in operation. The credit register will greatly assist the role of the Central Bank in meeting its statutory obligations. Again, I thank the Senators and I commend the Bill to the House. I am very grateful for the support from all sides and the very good preliminary debate here on Second Stage.