Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015.

• Statutory Instrument No.: 585/2015
• Published date: 01 January 2016

CONTENTS

Regulation

Part 1

Preliminary and General

1. Citation and commencement

2. Interpretation

3. Scope and application

4. Outsourced activity

5. Code of Conduct on Business Lending to Small and Medium Enterprises

Part 2

Lending to Micro and Small Enterprises

6. Preliminary

7. Unsolicited credit

8. Expertise for business lending to micro and small enterprises and points of contact

9. Annual meeting and credit reviews

10. Provision of information — general

11. Advertising

12. Pre-contract information

13. Post-sale information

14. Applications for credit

15. Security

16. Refusing or withdrawing credit

17. Arrears

18. Policy for financial difficulties cases

19. Standard information for borrowers in financial difficulties

20. Communicating with borrowers in financial difficulties

21. Independent reviews

22. Alternative arrangements

23. Operation of alternative arrangements

24. Appeals

25. Handling complaints

26. Records and compliance

Part 3

Lending to Medium-Sized Enterprises

27. Preliminary

28. Annual meeting and reviews

29. Provision of information — general

30. Pre-contract information

31. Post-sale information

32. Applications for credit

33. Security

34. Refusing or withdrawing credit

35. Arrears

36. Policy for financial difficulties

37. Standard information for borrowers in financial difficulties

38. Communicating with borrowers in financial difficulties

39. Independent reviews

40. Alternative arrangements

41. Operation of alternative arrangements

42. Appeals

43. Handling complaints

44. Records and compliance

S.I. No. 585 of 2015

CENTRAL BANK (SUPERVISION AND ENFORCEMENT) ACT 2013 (SECTION 48) (LENDING TO SMALL AND MEDIUM-SIZED ENTERPRISES) REGULATIONS 2015

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 1st January, 2016.

In exercise of the powers conferred on the Central Bank of Ireland (the “Bank”) by section 48 of the Central Bank (Supervision and Enforcement) Act 2013 (the “Act”), the Bank, having consulted, in accordance with section 49 of the Act, with the Minister for Finance, the Credit Union Advisory Committee and other persons that the Bank considers appropriate to consult in the circumstances and bodies that appear to the Bank to have expertise or knowledge of credit unions, hereby makes the following Regulations:

Part 1

Preliminary and General

Citation and commencement

1. (1) These Regulations may be cited as the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015.

(2) These Regulations come into operation on 1 July 2016 to the extent that they apply to regulated entities that are not credit unions.

(3) These Regulations come into operation on 1 January 2017 to the extent that they apply to credit unions.

Interpretation

2. In these Regulations—

“advertisement” means any communication the purpose of which is to advertise a product, service or regulated entity the subject of these Regulations, excluding name plaques and sponsorship material;

“all sums guarantee” means a guarantee applying not only to a specific credit facility agreement, but to all credit that may in future be provided by a regulated entity to a borrower for as long as the guarantee remains in place;

“alternative arrangement” in respect of a credit facility agreement means an agreement to discharge the borrower’s debt obligations to the regulated entity which is entered into in order to address arrears or financial difficulties and which is a variation or alternative to the terms and conditions of the credit facility agreement;

“arrears” means a payment or part of a payment due in accordance with a credit facility agreement or alternative arrangement which has not been paid by the borrower by the scheduled due date for payment and, in the case of an overdraft facility, where the borrower’s overdraft limit is exceeded for 30 consecutive days, and “in arrears” means a situation in which arrears have arisen;

“borrower” means a micro, small or medium-sized enterprise in the State with which, or in respect of which, a regulated entity is carrying out a relevant activity;

“business credit card” means a card issued by a regulated entity to a borrower by means of which goods, services or cash may be obtained by the borrower on credit and amounts in respect of the goods, services or cash may be charged to the credit card account of the borrower maintained by the regulated entity;

“cash” includes money in any form;

“complaint” means an expression of grievance or dissatisfaction by a borrower, either orally or in writing, in connection with the provision of credit or an alternative arrangement or the refusal of a regulated entity to provide credit or an alternative arrangement to a borrower;

“credit” means a deferred payment, cash loan or other similar financial accommodation, including hire purchase, invoice discounting and the letting of goods;

“credit facility agreement” means an agreement whereby a regulated entity grants or promises to grant credit to a borrower;

“Credit Review Office” means the office established under guidelines made by the Minister for Finance under section 210(1) of the National Asset Management Agency Act 2009 ;

“credit servicing” has the meaning assigned to it by section 28 of the Central Bank Act 1997 and “credit servicing activities” shall be construed accordingly;

“durable medium” means any instrument which enables the borrower to store information addressed to that borrower in a way accessible for future reference and for a period of time adequate for the purpose of the information, and allows the unchanged reproduction of the information stored;

“early redemption charge” means a sum to be paid by a borrower to a regulated entity in the event that a credit facility agreement or alternative arrangement is repaid early;

“financial difficulties” means a situation in which one or more of the following apply to a credit facility agreement or alternative arrangement:

(a) the borrower is in arrears under the credit facility agreement or alternative arrangement for 3 consecutive months;

(b) where the credit facility agreement is an overdraft facility, the approved limit on the overdraft is exceeded for 90 consecutive days;

(c) the regulated entity has, following an assessment carried out in accordance with Regulation 17(2)(b), 17(4)(b) or 35(2)(b), determined that the borrower’s circumstances are such that Regulations 18 to 23 or Regulations 36 to 41 should be applied to the borrower’s case,

and “financial difficulties cases” shall be construed accordingly;

“guarantee” means a contract by which a person becomes bound to the regulated entity for the fulfilment of a promise or engagement or other duty of a borrower;

“invoice discounting” means the provision of credit based on the unpaid sales invoices of a borrower;

“medium-sized enterprise” means a micro, small and medium-sized enterprise that is not a micro and small enterprise;

“micro and small enterprise” means an enterprise which employs fewer than 50 persons and which has an annual turnover and annual balance sheet total which does not exceed €10 million;

“micro, small and medium-sized enterprise” means an enterprise which employs fewer than 250 persons and which has an annual turnover not exceeding €50 million and an annual balance sheet total not exceeding €43 million;

“multi-lender credit” means credit offered or granted by 2 or more regulated entities working together to provide funds to one or more borrowers as part of the same credit arrangement;

“not co-operating” means a situation in which—

(a) the borrower has failed to make a full and truthful disclosure to the regulated entity of the information required by the regulated entity to assess the borrower’s financial situation, within the timeframe specified by the regulated entity,

(b) the warning letter, required in accordance with Regulation 20(8), has been issued to the borrower, and

(c) the borrower has not carried out the action or actions within the timeframes specified in the letter referred to in subparagraph (b);

“overdraft facility” means a credit facility agreement under which a regulated entity makes available to a borrower funds in excess of the current balance in a current account with the regulated entity;

“regulated entity” means a regulated financial service provider carrying out relevant activities;

“relevant activities” has the meaning assigned to it in Regulation 3(1);

“risk management officer” means the person appointed by a credit union under section 76C of the Credit Union Act 1997 ;

“security” means assets, undertakings, indemnities, guarantees or charges over assets offered to a regulated entity to secure a credit facility agreement;

“special term or condition” means a term or condition that does not form part of the regulated entity’s standard terms and conditions;

“total cost of credit to the borrower” in relation to a credit facility agreement means all the costs that the borrower is required to pay in connection with the credit facility agreement and that are known to the regulated entity concerned, including—

(a) interest, commissions, taxes and any other kind of fees, and

(b) where the conclusion of a service contract is compulsory to obtain the credit or to obtain it on the terms and conditions marketed, costs in respect of ancillary services relating to the credit facility agreement (in particular, insurance premiums).

Scope and application

3. (1) Subject to paragraphs (2) to (4), these Regulations apply to a regulated entity—

(a) providing or offering to provide credit to a borrower or from which a borrower is seeking to avail of credit,

(b) entering into, offering to enter into or with which a borrower has sought to enter into a credit...