Authorisation Process for Retail Credit Firms and Home Reversion Firms 

Introduction to Retail Credit Firms

Regulatory Regime for Retail Credit Firms

Retail Credit Firms are defined in Part V of the Central Bank Act 1997 (as amended) (the Act). Retail Credit Firms are firms that provide credit in the form of cash loans (whether or not provided on the security of a mortgage or charge over an estate or interest in land) directly to relevant persons. Please see the definitions of ‘retail credit firm’, ‘credit’ and ‘relevant person’ in the Act and included below for further detail in this regard. Under the Act a person who meets the definition of a Retail Credit Firm is required to obtain authorisation from the Central Bank in order to provide these services. The Act sets out circumstances where the Central Bank may exempt a person, or persons belonging to a specified class of persons, from being required to hold an authorisation as a retail credit firm. As a result, all firms who intend to operate in this area should ascertain if they fall within the scope of the definition of a Retail Credit Firm and require authorisation by the Central Bank. Firms are advised to seek legal advice if they are in any doubt regarding whether their activities fall within the scope of the legislation. If, having received and considered such advice, firms have any doubt about their status, they are advised to submit an application for authorisation.

All firms seeking authorisation as a Retail Credit Firm will be required to demonstrate to the Central Bank that they are in a position to meet the authorisation requirements set out in the Act.

It is an offence for such persons to commence the provision of retail credit firm activities until authorisation as a Retail Credit Firm has been obtained.

The definition of a retail credit firm as set out in the Act was amended by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (the 2015 Act). This legislative amendment brings certain persons who were previously excluded from requiring authorisation as a retail credit firm within the scope of the Act. Important: Specific transitional provisions apply to such persons who were carrying on the business of a retail credit firm immediately prior to the 2015 Act coming into force. See further information here.

Key Definitions under the Act

The Act defines a "Retail Credit Firm" as meaning:

‘retail credit firm’ means a person prescribed for the purpose of paragraph (e) of the definition of ‘credit institution’ in section 2(1) of the Consumer Credit Act 1995, or any other person who holds itself out as carrying on a business of, and whose business consists wholly or partly of, providing credit directly to relevant persons, but does not include-

(a) a person who is a regulated financial service provider authorised, by the Bank or an authority that performs functions in an EEA country that are comparable to the functions performed by the Bank, to provide credit in the State otherwise than under this Part, or,

(b) a person who is an authorised credit intermediary under Part XI of the Consumer Credit Act 1995, or

(c) in relation to credit that was originally provided by another person, a person to whom all or any part of that other person’s interest in the credit is directly or indirectly assigned or otherwise disposed of, or

(d) a person who provides credit on a once only or occasional basis, but only if the provision of the credit does not involve a representation, or create an impression (whether in advertising, marketing or otherwise), that the credit would be offered to other persons on the same or substantially similar terms, or;

(e) a person who is exempted, or who belongs to a class of persons that is exempted, under section 29A from being required to hold an authorisation as a retail credit firm.

The Act defines "Credit" as meaning:

‘credit’ means a cash loan (whether or not provided on the security of a mortgage or charge over an estate or interest in land), but does not include credit of a class specified in section 3(2) of the Consumer Credit Act 1995.

The Act defines a "relevant person" as meaning:

‘relevant person’ means a natural person within the State, other than-

(a) a natural person who is, or satisfies the criteria to elect to be treated as, a professional client for the purposes of the European Communities (Markets in Financial Instruments) Regulations 2007 (S.I. No. 60 of 2007), or

(b) a person who is a regulated financial service provider. 

 

The Act sets out a number of exemptions for persons which may be exempt from the definition of a retail credit firm:

Section 29A-

(1) The Bank may exempt a person from being required to hold an authorisation as a retail credit firm in relation to the provision of credit if, in the opinion of the Bank-

(a) the total amount or value of the credit that is to be provided by the person is such that it is reasonable to assume that the borrower will be in a position to negotiate on equal terms or to obtain appropriate legal and financial advice, or

(b) the person is one who, under section 8(2) of the Central Bank Act 1971, is exempted, or is a member of a class of persons that is exempted, from being required to hold a banking licence, or

(c) the person is one who provides credit solely for charitable or public purposes and at a rate of interest or on other terms more favourable than those that are currently available commercially,

and the exemption would not be inconsistent with the proper and orderly regulation of the provision of credit and the protection of customers of retail credit firms.

(2) The Bank may also exempt the persons belonging to a specified class of persons from being required to hold an authorisation as a retail credit firm in relation to the provision of credit if, in the opinion of the Bank-

(a) the total amount or value of the credit that is to be provided by those persons is such that it is reasonable to assume that borrowers from those persons will be in a position to negotiate on equal terms or to obtain appropriate legal and financial advice, or

(b) the persons are ones who, under section 8(2) of the Central Bank Act 1971, are exempted, or belong to a class of persons that 5 is exempted, from being required to hold a banking licence, or

(c) the persons are ones who provide credit solely for charitable or public purposes and at a rate of interest or on other terms more favourable than those that are currently available commercially,

and the exemption would not be inconsistent with the proper and orderly regulation of the provision of credit and the protection of customers of retail credit firms.

Application Process for New Retail Credit Firms

 

The purpose of this section is to provide information to firms considering applying for authorisation as a retail credit firm. The Central Bank of Ireland (the Central Bank) is the competent authority in Ireland for the authorisation and supervision of Retail Credit Firms under Part V of the Central Bank Act 1997 (as amended) (the Act).

Each applicant seeking authorisation must satisfy the Central Bank that it can meet the authorisation standards set out in the Act. In fulfilling its statutory role in this regard, the Central Bank adopts a robust, structured and risk-based process that seeks to ensure that only those firms that demonstrate compliance with these authorisation requirements are authorised.

The Central Bank seeks to process each application as expeditiously as possible while meeting its obligation to operate a rigorous and effective gatekeeper function. It aims to ensure that the application process is facilitative and accessible from the perspective of applicants and, importantly, that firms have clarity with regard to the process, its requirements and timelines.

Before Applying for Authorisation

In advance of submitting an Application for Authorisation, the firm should satisfy itself that:

  • its proposed business model requires authorisation pursuant to the Act;
  • it can comply with the authorisation requirements for retail credit firms;
  • it is capable of complying with, and adhering to, the authorisation requirements and on-going supervisory requirements that must be satisfied on an on-going basis; and 
  • it has read the Guidance Note for the Completion of an Application for Authorisation as a Retail Credit Firm, and has taken the information provided therein into consideration when completing the Application for Authorisation as a Retail Credit Firm Form

Firms are advised to seek legal advice if they are unsure as to whether their proposed activities require authorisation pursuant to the Act or if they are unsure as to how they should comply with the authorisation requirements set out in the Act. If, after having received and considered such advice, firms have any doubt about their status, they are advised to submit an application for authorisation.

 Summary of the Key Steps in the Application Process

  • The firm submits a completed Application Form with supporting documentation;
  • The Central Bank acknowledges receipt of the application submission;
  • The Central Bank assesses whether the application submission contains the key information and documentation required to progress to the assessment phase;
  • Where all key information and documentation has been provided, the Central Bank completes an assessment of the application submission and may issue detailed comments and/or seek additional information;
  • The applicant is provided with the opportunity to address the comments and requests issued by the Central Bank in a revised application submission(s);
  • The Central Bank will assess these subsequent application submission(s) and notify the applicant of its assessment and next steps.  The applicant is provided with a further opportunity to address any concerns arising at this stage in the process (if any); and
  • The Central Bank will notify the applicant of its decision in respect of the application submission.

In the sections set out below, the firm will be able to learn about the different stages of the application process in more detail.

The Documentation Required to make an Application for Authorisation

Firms should submit the following documentation which should be fully completed:

  1. An Application for Authorisation as a Retail Credit Firm Form (including the specific information/documentation requirements set out therein);
  2. A Business Plan; and
  3. A Programme of Operations.

Once an application is submitted the applicant will also need to ensure that all relevant individuals proposed to hold a Pre-Approval Controlled Function ("PCF") role (typically board members, senior management, key function holders) and any qualifying shareholders complete Fitness and Probity Individual Questionnaires – more information here. Individual Questionnaires must be submitted electronically via the Central Bank’s Online Reporting System by all relevant individuals, but qualifying shareholders (that are not also proposed PCF role holders) are required to submit a paper version. Please note that access to the online Individual Questionnaire only becomes available after an application has been deemed to contain all the key information needed to progress to the assessment phase of the application process.

The completed Application Form, along with all relevant accompanying material, should be submitted in both paper and electronic format to the Central Bank. The paper copy should be sent to RCF Authorisations Team, Consumer Protection: Policy & Authorisations, Central Bank of Ireland, PO Box 559, Dame Street, Dublin 2 and the electronic version can be included with the paper copy or sent by email to rcf@centralbank.ie. The completed paper IQ(s), where relevant, should also be submitted to the above address.

The Key Steps in the Application Process

 

The various stages of the application process are as follows:

Stage 1 - Acknowledgement

The Central Bank will acknowledge receipt of an Application for Authorisation submitted by the applicant within 3 working days of receipt.

Stage 2 - Key Information Check

The Central Bank will then check that the application material submitted contains all the key information and documentation required to proceed to the assessment phase. Within 10 working days of receipt of the application, the Central Bank will either:

I. Advise the applicant that the application contains sufficient material to proceed to the assessment phase (further information is likely to be required as part of the assessment phase and may be required thereafter before a decision will be made in respect of the application); or

II. Advise the applicant that the application does not contain sufficient material to proceed to the assessment phase and so is not being progressed to that phase. A statement of the omitted information is also provided to assist the applicant should it wish to submit another application in the future. Any subsequent application will be considered a new application and the application process commences again at Stage 1.

Stage 3 - Assessment Phase

Where sufficient information has been received, as outlined in Stage 2(I) above, the Central Bank will then proceed to the assessment phase of the application process. The application material submitted will be reviewed against the relevant authorisation requirements to determine whether sufficient information has been provided to reach a determination in respect of the application. The Central Bank will issue initial comments to the applicant based on its review of the application material submitted and any subsequent comments based on its review of responses submitted by the applicant. The Central Bank is committing to completing the assessement phase of the application process in 90 working days. However, it should be noted that in the event of further and/or subsequent information being sought, this 90 day ‘clock’ is paused until such information is received by the Central Bank from the applicant.

In the event of the applicant failing to respond to a request from the Central Bank for further and/or subsequent information, after 60 working days the application may not be considered further by the Central Bank (see Guidance Note).

Stage 4 – Notification of Intent

Once the assessment phase has been completed the Central Bank will notify the applicant of its overall assessment of the application as follows:

a) Where the assessment is favourable, the Central Bank will notify the applicant by letter that it proposes to authorise the applicant on the basis of the information provided in its application submission, provided any specified final steps are taken and/or any specified final items of information and evidence are received. This letter will also specify any specific conditions that the Central Bank proposes to impose on the authorisation itself once granted.  This letter will explain the reasons for these proposed conditions and the applicant will be afforded the opportunity to make representations in respect of the proposed conditions before the Central Bank makes any decision on the application.

b) In the event that the Central Bank is not satisfied on foot of the Assessment Phase such that it can issue a Notification of Assessment letter under (a) above,  the Central Bank will advise the applicant of this by letter. The letter will set out the areas to be addressed and afford the applicant the opportunity to do so and to make any submissions it wishes to the Central Bank in respect of these matters.

Stage 5 – Notification of Decision in Respect of the Application

Once the Central Bank has assessed any further information/evidence/representations submitted by the applicant following on from Stage 4 above, the Central Bank will notify the applicant, via letter, of its decision on the application as follows:

a) Authorisation – The Central Bank has decided to grant an authorisation.

b) Authorisation with Specific Conditions – The Central Bank has decided to grant an authorisation with specific conditions attached to the authorisation. The specific conditions to be attached to the authorisation will be outlined in the letter.

c) Proposed Refusal of Authorisation – The Central Bank is minded to refuse the application for authorisation. In accordance with the applicable legislation, the Central Bank will notify the applicant of the grounds for the proposed refusal of the authorisation. The applicant will then have an opportunity to make submissions in response to the proposed refusal.  These submissions will then be considered by the Central Bank following which a decision will be taken by the Central Bank to grant or refuse the authorisation applied for, as appropriate. Details of the Central Bank’s process for the refusal of an application for authorisation are available here.

If the applicant has any queries in respect of the application process, it can contact the Central Bank at rcf@centralbank.ie.

Optional Pre-Application Meeting

The Central Bank offers the facility of a single optional pre-application meeting to firms to answer specific questions about any aspect of the application process and completing the application form. Please note that the Central Bank recommends that firms who wish to avail of this facility have completed their application material to an advanced state before requesting such a meeting and have their specific questions prepared in advance in order to make the meeting as productive as possible. Such meetings will typically be no longer than one hour.

Introduction to Home Reversion Firms

Regulatory Regime for Home Reversion Firms 

Home Reversion Firms are defined in Part V of the Central Bank Act 1997 (as amended) (the Act). Home Reversion Firms are firms that provide home equity release in the form of home reversion agreements to people in order to give people access to the value which they have built up in their home for their own use. Please see the definitions of Home Reversion Firms and home reversion agreements in the Act and included below for further detail in this regard.

Under the Act a person who meets the definition of a Home Reversion Firm is required to obtain authorisation from the Central Bank in order to provide these services. As a result, all firms who intend to operate in this area should ascertain if they fall within the scope of the definition of a Home Reversion Firm and require authorisation by the Central Bank. Firms are advised to seek legal advice if in any doubt regarding whether their activities fall within the scope of the legislation. If, having received and considered such advice, firms have any doubt about their status, they are advised to submit an application for authorisation.

All firms seeking authorisation as a Home Reversion Firm will be required to demonstrate to the Central Bank that they are in a position to meet the authorisation requirements set out in the Act.

It is an offence for such persons to commence the provision of home reversion firm activities until authorisation as a Home Reversion Firm has been obtained.

 

Key Definitions under the Act

The Act defines a "Home Reversion Firm" and "Home Reversion Agreement" as follows:

‘home reversion firm’ means a person carrying on a business of entering into home reversion agreements;’

‘home reversion agreement’ means an agreement between a vendor and a home reversion firm that provides-

(a) for the conveyance by the vendor to the home reversion firm of an estate or interest in land (which includes the principal residence of the vendor or of the vendor’s dependants) for a discounted sum or an income (or both), and

(b) for the vendor to retain the right to live in the residence until the occurrence of one or more events specified in the agreement.’ 

Application Process for Home Reversion Firms

The purpose of this section is to provide information to firms considering applying for authorisation as a home reversion firm. The Central Bank of Ireland (the Central Bank) is the competent authority in Ireland for the authorisation and supervision of Home Reversion Firms under Part V of Central Bank Act 1997 (as amended) (the Act).

Each applicant seeking authorisation must satisfy the Central Bank that it can meet the authorisation standards set out in the Act. In fulfilling its statutory role in this regard, the Central Bank adopts a robust, structured and risk-based process that seeks to ensure that only those applicants that demonstrate compliance with these authorisation requirements are authorised.

The Central Bank seeks to process each application as expeditiously as possible while meeting its obligation to operate a rigorous and effective gatekeeper function. It aims to ensure that the application process is facilitative and accessible from the perspective of applicants and, importantly, that applicants have clarity with regard to the process, its requirements and timelines.

Before Applying for Authorisation

 

In advance of submitting an Application for Authorisation, the firm should satisfy itself that:

    • its proposed business model requires authorisation pursuant to the Act; 
    • it can comply with the authorisation requirements for home reversion firms;
    • it is capable of complying with, and adhering to, the authorisation requirements and on-going supervisory requirements that must be satisfied on an on-going basis; and
    • it has read the Guidance Note for the Completion of an Application for Authorisation as a Home Reversion Firm, and has taken the information provided therein into consideration when completing the Application for Authorisation as a Home Reversion Firm Form.

    Firms are advised to seek legal advice if they are unsure as to whether their proposed activities require authorisation pursuant to the Act or if they are unsure as to how they should comply with the authorisation requirements set out in the Act. If, after having received and considered such advice, firms have any doubt about their status, they are advised to submit an application for authorisation.

    Summary of the Key Stages in the Application Process

    The applicant submits a completed Application Form with supporting documentation;

    • The firm submits a completed Application Form with supporting  documentation;
    • The Central Bank acknowledges receipt of the application submission;
    • The Central Bank assesses whether the application submission contains the key information and documentation required to progress to the assessment phase;
    • Where all key information and documentation has been provided, the Central Bank completes an assessment of the application submission and may issue detailed comments and/or seek additional information;
    • The applicant is provided with the opportunity to address the comments and requests issued by the Central Bank in a revised application submission(s);
    • The Central Bank will assess these subsequent application submission(s) and notify the applicant of its assessment and next steps.  The applicant is provided with a further opportunity to address any concerns arising at this stage in the process (if any); and
    • The Central Bank will notify the applicant of its decision in respect of the application submission.

    In the sections set out below, the firm will be able to learn about the different stages of the application process in more detail.

    The Documentation Required to Make an Application for Authorisation 

    Applicants should submit the following documentation which should be fully completed:
    1. An Application for Authorisation as a Home Reversion Firm Form (including the specific information/documentation requirements set out therein);
    2. A Business Plan; and 
    3. A Programme of Operations.

    Once an application is submitted and the applicant  has been provided with the log-in details for the ONR the applicant  will need to ensure that all relevant individuals proposed to hold a Pre-Approval Controlled Function ("PCF") role (typically board members, senior management, key function holders) and any qualifying shareholders complete Fitness and Probity Individual Questionnaires – more information and guidance material on completing the IQ can be found here. Individual Questionnaires must be submitted electronically via the ONR by all relevant individuals, but qualifying shareholders (that are not also proposed PCF role holders) are required to submit a paper version. Please note that access to the online Individual Questionnaire only becomes available after an application has been deemed to contain all the key information and documentation needed to progress to the assessment phase of the application process.

    The completed Application Form, along with all relevant accompanying material, should be submitted in both paper and electronic format to the Central Bank. The paper copy should be sent to HRF Authorisations Team, Consumer Protection: Policy & Authorisations, Central Bank of Ireland, PO Box 559, Dame Street, Dublin 2 and the electronic version can be included with the paper copy or sent by email to hrf@centralbank.ie. The completed paper IQ(s), where relevant, should also be submitted to the above address.

    The Key Steps in the Application Process 

    The various stages of the application process are as follows:

    Stage 1 - Acknowledgement

    The Central Bank will acknowledge receipt of an Application for Authorisation submitted by the applicant within 3 working days of receipt.

    Stage 2 - Key Information Check

    The Central Bank will then check that the application material submitted contains all the key information and documentation required to proceed to the assessment phase. Within 10 working days of receipt of the application, the Central Bank will either:

    I. Advise the applicant that the application contains sufficient material to proceed to the assessment phase (further information is likely to be required as part of the assessment phase and may be required thereafter before a decision will be made in respect of the application); or

    II. Advise the applicant that the application does not contain sufficient material to proceed to the assessment phase and so is not being progressed to that phase. A statement of the omitted information is also provided to assist the applicant should it wish to submit another application in the future. Any subsequent application will be considered a new application and the application process commences again at Stage 1.

    Stage 3 - Assessment Phase

    Where sufficient information has been received, as outlined in Stage 2(I) above, the Central Bank will then proceed to the assessment phase of the application process. The application material submitted will be reviewed against the relevant authorisation requirements to determine whether sufficient information has been provided to enable the Central Bank to issue a ‘Notification of Assessment’ letter as referred to in Stage 4 below.  The Central Bank will issue initial comments to the applicant based on its review of the application material submitted and any subsequent comments based on its review of responses submitted by the applicant. The Central Bank has published service standards (see below) in respect of the processing of applications for authorisation and in the context of meeting those standards the service standard timeframe to which the Central Bank has committed for the assessment phase of the application process is working days.  However, it should be noted that in the event of further and/or subsequent information being sought, this 90 day ‘clock’ is paused until such information is received by the Central Bank from the applicant.

    In the event of the applicant failing to respond to a request from the Central Bank for further and/or subsequent information, after 60 working days the application may not be considered further by the Central Bank (see Guidance Note).

    Stage 4 – Notification of Assessment

    The Central Bank will notify the applicant of the outcome of the Assessment Phase of the application process as follows:

    a) Where the assessment is favourable, the Central Bank will notify the applicant by letter that it proposes to authorise the applicant on the basis of the information provided in its application submission, provided any specified final steps are taken and/or any specified final items of information and evidence are received. This letter will also specify any specific conditions that the Central Bank proposes to impose on the authorisation itself once granted.  This letter will explain the reasons for these proposed conditions and the applicant will be afforded the opportunity to make representations in respect of the proposed conditions before the Central Bank makes any decision on the application.; or

    b) In the event that the Central Bank is not satisfied on foot of the Assessment Phase such that it can issue a Notification of Assessment letter under (a) above,  the Central Bank will advise the applicant of this by letter. The letter will set out the areas to be addressed and afford the applicant the opportunity to do so and to make any submissions it wishes to the Central Bank in respect of these matters.

    Stage 5 – Notification of Decision in Respect of the Application

    Once the Central Bank has assessed any further information/evidence/representations submitted by the applicant following on from Stage 4 above, the Central Bank will notify the applicant, via letter, of its decision on the application as follows:

    a) Authorisation – The Central Bank has decided to grant an authorisation.

    b) Authorisation with Specific Conditions – The Central Bank has decided to grant an authorisation with specific conditions attached to the authorisation. The specific conditions to be attached to the authorisation will be outlined in the letter.

    c) Proposed Refusal of Authorisation – The Central Bank is minded to refuse the application for authorisation. In accordance with the applicable legislation, the Central Bank will notify the applicant of the grounds for the proposed refusal of the authorisation. The applicant will then have an opportunity to make submissions in response to the proposed refusal.  These submissions will then be considered by the Central Bank following which a decision will be taken by the Central Bank to grant or refuse the authorisation applied for, as appropriate. Details of the Central Bank’s process for the refusal of an application for authorisation are available here.

    If the applicant has any queries in respect of the application process, it can contact the Central Bank at hrf@centralbank.ie.

     

    Optional Pre-Application Meeting

    The Central Bank offers the facility of a single optional pre-application meeting to firms to answer specific questions about any aspect of the application process and completing the application form. Please note that the Central Bank recommends that firms who wish to avail of this facility have completed their application material to an advanced state before requesting such a meeting and have their specific questions prepared in advance in order to make the meeting as productive as possible. Such meetings will typically be no longer than one hour.