Fianna Fáil Finance spokesperson Michael McGrath has described as completely unacceptable a further delay in the establishing of a Central Credit Register which is designed to help financial institutions make informed lending decisions and protect borrowers from excessive debt.
He was responding to a parliamentary reply from the Minister for Finance which indicated that data for the new credit register will be “supplied by lenders on a phased basis during the course of late 2015 and into 2016”.
Deputy McGrath commented, “The need for a central credit register operated by the Central Bank was highlighted in a number of reports over the years including those from the Law Reform Commission, the Expert Group on Mortgage Arrears, and the Central Bank itself. It was clear that the lack of centralised source of credit data was a significant factor in disastrous lending decision by Ireland’s banks and financial institutions in respect of individuals and companies. The system of privately operated credit registers and the lack of obligation on financial institutions to cross check outstanding financial commitments fuelled the credit bubble. Many people took out loans and credit cards across a number of financial institutions which they are still struggling to repay. Far from acting to prevent this, the banks actively encouraged excessive lending, falling over themselves to offer fast access to credit.
We are now entering a new credit cycle as the economy recovers. Demand for mortgages, personal loans and credit generally is set to increase. The fact that the consumer register is unlikely to be operational until 2016 gives rise to concern that bad lending decisions will again be made and is contrary to assurances that were given when the issue was debated in the Dáil that it would be up and running without delay. The position in relation to commercial credit is even worse with the introduction of a centralised register in this regard only tentatively planned for 2017.
“I believe there is a particular problem in relation to people taking out multiple loans from moneylenders. Although the provisions of the legislation are not perfect in this regard they would be a significant improvement on the current situation. It is therefore extremely disappointing that the legislation is effectively in abeyance for another two years.
“The Minister needs to explain why it going to take so long to fully establish the register and consider whatever action would be appropriate to expedite its implementation.”