Hire purchase and leasing agreements (including personal contract plans) now reportable under Credit Reporting Act 2013
The Markets in Financial Instruments Act 2018 (the Act) was signed by the President on 29 October 2018 and has accordingly become law.
Amongst other amendments to financial instrument and financial services legislation, the Act makes certain amendments to credit institutions' credit reporting obligations under the Credit Reporting Act 2013 (the CRA).
Unintentionally broad original trade credit exclusion
The Act amends the definition of 'credit' under the CRA. Trade credit was originally intended to be excluded from the reporting obligations under the Act (as an exclusion from the definition of 'credit'). However, the drafting of this exclusion unintentionally also excluded any credit agreement where a person provides credit to facilitate the purchase of a good or service from the same person (including hire purchase agreements, personal contract plans and leasing agreements).
In the Central Bank of Ireland's Guidance on the Central Credit Register for Credit Information Providers (Version 1.3 March 2018), it noted that 'the Central Bank intends, subject to the appropriate legislative amendment being made, to bring these credit agreements into scope and will advise of the commencement date for the reporting of this data in due course'.
Definition of 'credit' expanded to capture hire purchase and leasing finance, including personal contract plans
This legislative 'fix' has now been applied through enactment of the Act. By narrowing the trade credit exclusion, the definition of 'credit' has now been expanded, to capture hire purchase and leasing finance, including personal contract plans. Such credit providers will have to report information about these loans to the Central Credit Register. While it is unclear at present when these reporting requirements will come into effect, as indicated above, the Central Bank of Ireland has stated it 'will advise of the commencement date for the reporting of this data in due course'.
Revised trade credit exclusion
The revised, narrower exclusion of 'trade credit' now applies.
Trade credit in the form of a loan, deferred payment or other form of financial accommodation that satisfies the following conditions, is not 'credit' which is subject to the reporting obligations under the Credit Reporting Act 2013:
- both the trade credit provider and the trade credit recipient are acting in the course of his or her business, trade or profession
- the trade credit provider is not a regulated financial services provider
- the terms of the trade credit provide for repayment, whether in instalments or as a single amount, of the whole of the credit by a date that is not later than 6 months after the date of its provision, and
- the purpose of the trade credit is to facilitate the purchase of goods or services from the trade credit provider.
A copy of the Act is now available here.
Date published: 6 November 2018