Written answers

Tuesday, 10 December 2013

Department of Finance

Banking Sector Regulation

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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158. To ask the Minister for Finance his views on whether there are grounds for the appointment here of an independent professional to review possible mistreatment of small business customers in financial difficulty in a manner similar to the appointment by the Financial Conduct Authority in the UK of an independent professional into Royal Bank of Scotland; and if he will make a statement on the matter. [53002/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am aware of the content of the report to which the Deputy refers. My officials met with Ulster Bank officials on 27 November after the publication of the report. The report contained allegations about West Register and my officials were assured that West Register was involved with a very small number of Irish businesses. There is no reference to Ireland in the report. I understand that RBS has appointed Clifford Chance to independently review the treatment of distressed customers by the Global Restructuring Group and report early in the New Year. I also understand that the findings will be applied across the RBS Group.

I would refer the Deputy to the revised Code of Conduct for Business Lending to SMEs, which came into effect on 1 January 2012. A specific focus of the Code is the treatment of borrowers in financial difficulties. Lenders are required to provide information to SMEs in relation to the importance of engaging with the lender to address their financial difficulties, the procedures for dealing with SMEs in financial difficulties including timeframes, details of fees which may apply, the type of information they require in assessing cases and information on their right of appeal. Lenders must assess whether an alternative repayment arrangement can be put in place and allow the SME appeal that decision and meetings with SMEs which approach them with concerns about meeting repayments.

The banks are required to comply with the Code as a matter of law. The Code makes it clear that anybody acting for or on behalf of a bank is subject to its provisions. The Central Bank can invoke its statutory powers to require compliance with the Code. A breach of the Code is a breach of a regulatory requirement and may be the subject of enforcement action by the Central Bank. Additionally, as the Deputy is aware, the two main banks are subject to oversight by the Credit Review Office and the CRO has been active in overturning rejections by the banks of credit applications from the SME sector.

However, the Deputy can be assured that this is an area that I will keep under review given the importance of the SME sector to fostering and supporting economic recovery.

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