The Central Bank’s SME Regulations and Consumer Protection Code outline requirements which regulated lenders (other than credit unions) must comply. The SME Regulations include various protections for SME customers who may be at risk of going into arrears, or are in arrears. These include requiring lenders to:

• Provide borrowers with specific written reasons for refusing or withdrawing credit
• Have policies and procedures in place with a core objective of assisting borrowers to resolve their financial difficulties
• Contact borrowers who are in arrears for 15 working days, in order to identify the reason why the arrears have arisen. This will allow them to assess whether the borrower’s circumstances are such that the requirements placed on firms for dealing with borrowers in financial difficulties should apply to that borrower.
• Have an internal Appeals Panel in place to appeal certain decisions made by a firm.  

If you are in, or at risk of, financial difficulty, it is in your interest to engage with your lender about those financial difficulties. If you contact your lender, your lender must offer you an immediate review of your credit facility agreements, alternative arrangements and security, as appropriate and must inform you of the outcome of that review.

For more information, see our explainer video: “Support for SMES.”

If your business is experiencing, or likely to experience financial difficulty talk to your lender as soon as possible. Do not ignore the situation.

It’s in your interest to engage with your lender. Early engagement with your lender may prevent your business’s financial situation from worsening.

Under the SME Regulations, you have the option of an immediate review with your lender of your business’s credit facilities, alternative arrangements and security.

Your lender must provide you with an information booklet that explains, amongst other things, your lender’s procedure for dealing with borrowers in financial difficulty, as well as relevant timelines.

Following a review of the financial situation of your business, your lender may offer an alternative arrangement.

An alternative arrangement is a new agreement with your lender to address your business’s financial difficulties.

The Central Bank’s clear expectation is that lenders engage with you – in line with the Consumer Protection Code and the SME Regulations – to deliver appropriate solutions and facilitate as many borrowers as possible to return to repaying their debt.

If your business is experiencing financial difficulty, or if you are concerned about going into financial difficulty, you should talk to your lender as soon as possible. You should not ignore the situation.

 It’s in your interest to engage with your lender.

Early engagement with your lender may prevent the financial situation of your business from worsening. Your lender has an obligation to offer you an immediate review your business’s financial circumstances, with the objective of assisting your business to resolve its financial difficulties. Your lender may offer you an alternative arrangement to ease the financial burden on your business, or may provide new credit to your business to help it trade through these difficult times.

If your business is in arrears and doesn’t engage, it risks being deemed as uncooperative by its lender. This may have longer-term negative implications for your business’s credit rating.

 

Whilst each borrower’s circumstance will be different, depending on the specific terms of the credit agreement with your lender, non-engagement may have the following implications for you and your business:

• Your lender will be unable to determine whether it can offer your business an alternative arrangement, which may assist your business to trade through its current difficulties
• Your lender may have the ability to withdraw the credit facilities it currently offers to your business
• Your lender may have the ability to charge your business additional fees, higher interest or other financial penalties
• If you have provided security in support of the credit facilities, your lender may exercise its legal and contractual rights to enforce that security. Where security is realised, the borrower (including any guarantors) will remain liable for any outstanding debt
• Your lender may deem your business to be not cooperating. If you are classified as not cooperating, your lender is less likely to offer your business an alternative arrangement, and is more likely to enforce its security rights
• Your business’s credit record is most at risk if your business is in arrears, and not engaging with its lender to resolve its financial difficulties.

The Central Bank has a strong consumer protection framework in place, covering consumers and SMEs. Under the Central Bank framework, SMEs are protected by the Consumer Protection Code and the SME Regulations. It is important to engage with your lender as many of these protections only apply if you engage with your lender.

If you are concerned about your business going into financial difficulty, you should talk to your bank or lender.

Whilst all decisions on credit applications are a matter for each lender, and the Central Bank has no role to play in the commercial decisions of those banks or lenders, the Central Bank supports the supply of credit to viable businesses.

The Central Bank, as part of the Eurosystem, has taken a number of policy decisions that allow lenders maintain the flow of credit to the economy during periods of financial stress.

If a lender refuses a borrower’s credit application, the lender must provide an explanation of the reasons why the application for credit was refused.

If you are not satisfied with the decision of the lender on your credit application, you may have the right to appeal that decision to the Credit Review Office. The lender must advise you of this right to appeal, and must provide you with the contact details of the Credit Review Office.

In accordance with the Central Bank’s SME Regulations, the Central Bank’s clear expectation is that lenders engage with you to deliver appropriate solutions and facilitate as many borrowers as possible to return to repaying their debt.

Your lender may offer you an alternative arrangement to ease the financial burden on your business, or may provide new credit to your business to help it trade through these difficult times.

An alternative arrangement is a new agreement with your lender to address arrears or financial difficulties, and may include:

• A reduced payment for a period of time, which could be less than or greater than interest only
• An “interest only” arrangement, where you only pay the interest payments on your loan for a period of time
• A temporary increase to your working capital facilities where it is agreed with your lender, for example, to address temporary liquidity issues
• A payment break where you agree with your lender to postpone your repayments, or agree a reduced payment where your loan repayments are reduced for an agreed period of time.

Every borrower’s circumstances are different, and as such, your lender will consider your particular situation and discuss a range of options to help you deal with your financial difficulties.

Whilst all decisions on credit applications are a matter for each lender, and the Central Bank has no role to play in the commercial decisions of those banks or lenders, the Central Bank supports the supply of credit to viable businesses.

If your lender does not offer an alternative arrangement, it must inform you in writing of the specific reasons why it is not offering an alternative arrangement.

Your lender must also advise of your right to appeal its decision and explain the process for doing this. Your lender must make a decision on your appeal within 15 days, or if it can’t do so, it must advise when it will decide, and explain why it will take longer than 15 days.

If you are not satisfied with the decision of the bank or lender on your credit application, you may have the right to appeal that decision to the Credit Review Office. The lender must advise you of this right to appeal, and provide you with the contact details of the Credit Review Office.

Yes, after the review, your lender must respond to you within 15 days advising if it will offer an alternative arrangement; alternatively it must advise when it will respond, and explain why it will take longer than 15 days.

The 15 days starts from the date your lender has received the information that it has requested to allow it consider your application for an alternative arrangement.

Alternative arrangements may differ between lender and customer, and as such, each alternative arrangement will be different in terms of its financial implications for each borrower.

Where a lender offers an alternative arrangement, the lender must include the following information in the offer documentation:

• The timeframe for the borrower to avail of the offer of the alternative arrangement
• The new repayment amounts on the credit facility under the proposed alternative arrangement, as applicable, and the number and frequency of those repayment amounts
• The term of the alternative arrangement
• The implications arising from an alternative arrangement including the impact on:
  • The term of the credit facility agreement
  • The balance outstanding on the account and
  • The monetary amount of any arrears on the account.
• If known, details of any residual debt remaining at the end of an alternative arrangement and owed by the borrower and, if not known, details of how residual debt will be determined
• How interest and charges will be applied to the credit facility as a result of the alternative arrangement.

Your cost of credit may change if you avail of an alternative arrangement. Your cost of credit is the difference between the amount you borrow and the total amount you repay over the term of the loan. Cost of credit can be influenced by interest charged, fees, repayment frequency, term of your loan and other charges. By engaging with your lender, any change in your cost of credit can be explained to you.

If your circumstances change after agreeing an alternative arrangement, including if they improve, you should let your lender know as soon as possible. The arrangement you are on might not be appropriate any longer, so they will review and consider what other options are available.

If your lender does not offer an alternative arrangement, it must inform you in writing of the specific reasons why it is not offering an alternative arrangement, and of your right to appeal that decision.

Your lender must advise you how you can appeal and it must make a decision on your appeal within 15 days. If it can’t do so, it must advise when it will decide, and explain why it will take longer than 15 days.

You may also be able to appeal the lender’s decision to the Credit Review Office. Your lender must inform you of your right to appeal to Credit Review, and must provide you with Credit Review’s contact details.

A lender must allow you a reasonable period of time to consider submitting an appeal - this period of time shall be at least 20 working days from the date the lender notifies you of its decision not to grant an alternative arrangement.

The lender must provide you with an information booklet which includes an explanation of the lenders internal appeals process, and the timeframes involved.

If your circumstances change after agreeing an alternative arrangement, including if they improve, you should let your lender know as soon as possible.

The alternative arrangement you are on might not be appropriate any longer, so your lender will review the position and consider what other options are available.

Your cost of credit may change if you avail of a new alternative arrangement. Your cost of credit is the difference between the amount you borrow and the total amount you repay over the term of the loan. Cost of credit can be influenced by interest charged, fees, repayment frequency, term of your loan and other charges.

By engaging with your lender, any change in your cost of credit can be explained to you.

The ability of a lender to withdraw credit facilities, and the circumstances in which it can do so, will be outlined in the credit facility agreement that you signed with your lender.

If a lender does withdraw or amend a credit facility agreement, the lender must advise you, promptly and in writing, with an explanation of the reasons for the lender’s decision.

Yes.  If you are not satisfied with the decision of the bank or lender on your credit application, you may have the right to appeal that decision to the Credit Review Office. Your lender must advise you of this right to appeal, and must provide you with its contact details.

The Credit Review Office is designed to ensure the flow of credit to viable Irish businesses.

It was set up to provide a simple and effective credit review and appeals process for business owners who had been refused credit from participating banks.

Participating banks include; AIB, BOI, PTSB and Ulster Bank.

The Central Bank has no remit over individual credit decisions made by lenders. These are commercial decisions for each lender, and the Central Bank does not have the mandate or ability to compel a lender to provide a loan or alternative arrangement to particular borrowers in any circumstance.

As lenders are commercial entities, each lender will determine its own credit appetite, policies and procedures for assessing credit applications from borrowers, including borrowers that are in financial distress.

However, the Central Bank’s SME Regulations include various protections for SME customers who may be at risk of going into arrears, or are in arrears. These include requiring lenders to provide borrowers with specific reasons in writing, for refusing or withdrawing credit.

In addition, your lender has an obligation to offer you an immediate review of your business’s financial circumstances, with the objective of assisting your business to resolve its financial difficulties.

If you are unhappy with the decision of your lender, you can appeal that decision through your lender’s internal appeals process. Your lender must provide you with an information booklet which includes an explanation of the lender’s internal appeals process, and the timeframes involved.

Your lender must make a decision on your appeal within 15 days, or if it can’t do so, it must advise when it will decide, and explain why it will take longer than 15 days.

You may also be able to appeal the lender’s decision to the Credit Review Office. Your lender must inform you of your right to appeal to Credit Review, and must provide you with Credit Review’s contact details.

The Central Credit Register (CCR) is a system for collecting personal and credit information on loans of €500 or more.

The CCR provides factual information, to lenders and borrowers, on a borrower’s credit history, including details of a borrowers overall indebtedness and their payment track record, such as payments made and payments missed.

Lenders must report accurate, complete and up to date information to the CCR, and the Central Bank’s role is to match this information to create a credit report.

Lenders and borrowers can apply for credit reports.

Lenders use this information so that they can better understand a borrowers overall financial position, which enables them assess an application in terms of ability repay current and proposed borrowings

It is in the interests of lenders and borrowers that lenders provide credit in a manner that is responsible, and does not expose the lender or borrower to undue risk.

It is important to note that the Central Credit Register does not produce credit scores or credit ratings, nor does it contain guidance on what decision a lender should make on a borrower’s credit application.

It is a matter for each lender to make their own lending decision in accordance with their own credit policies and risk appetite, subject to applicable law and regulatory requirements.

Many borrowers have been impacted by COVID-19. Through no fault of their own, their business’s ability to repay their debts was impacted as incomes reduced, and businesses were forced to close or change their business models due to stay at home orders.

Restructuring of debts, including mortgages, will be a normal and natural consequence of COVID-19.

Restructuring of debt may assist your business meet its financial obligations, including the full repayment of your debt into the future.

If your business agrees a restructure with its lender as a result of financial distress, for example an extension to the term of your loan to allow it make lower repayments, this will be reported to the Central Credit Register (CCR) and included on its credit report.

If borrowers want to add an explanatory statement to their credit report, to explain any entry that is on their credit record, they can do so at any time.

It is important to note that the Central Credit Register does not produce credit scores or credit ratings, nor does it contain guidance on what decision a lender should make on a borrower’s credit application.

It is a matter for each lender to make their own lending decision in accordance with their own credit policies and risk appetite, subject to applicable law and regulatory requirements.

You will need to check your specific policy to determine if you have a valid claim. This will be in your policy documents, most likely in a Policy Schedule or in your Insurance Product Information Document (IPID). If in doubt, you should contact your insurer or broker. Policyholders should note that all claims may not be valid and that cover may not apply in all instances.

In the first instance, you should contact your insurer or broker as soon as possible. Details of how to make a claim will also be outlined in your policy documents.

Your insurer is required to help you make a claim and give you appropriate information on its progress. If you used an insurance broker to buy the insurance, they may also be able to help you with your claim.

However, due to the complexity of the claim or other reasons, you may wish to appoint a claims management company/public loss assessor to deal with the insurer on your behalf, at your own expense.

Your Insurance Product Information Document and Policy Schedule should state the term of the contract, including the start and end dates. If in doubt, you should contact your insurer or broker.

You should contact your broker, insurer or other advisor about how to make a claim.

If your claim is affected by the outcome of the High Court judgment, you will be contacted by your insurer or your broker regarding what the judgment means for you. However, if you do not hear from your insurer or your broker and you believe your business interruption policy is responsive to COVID-19 you should follow up with them directly.

Your policy cover or claim is affected by the outcome any court/legal decisions, you should hear from your insurer or broker regarding what the outcome means for you. However, if you do not hear from your insurer or your broker you should follow up with them directly.

Each claim is assessed on a case by case basis to determine whether the policy provides valid cover for the effects of COVID-19. Policyholders are encouraged to contact their broker, insurer or other advisers for further information and support with the claims process.

If you disagree with your insurer’s or broker’s final decision on your claim or believe you have not been treated fairly, you can make a complaint through the insurer’s or broker’s internal complaints handling process.

If you are unhappy with your insurer’s or broker’s response to your complaint and you are an eligible complainant, you may refer your complaint to the Financial Services and Pensions Ombudsman (FSPO), which helps to resolve individual consumer complaints.

The Central Bank has written to insurance firms to make clear our expectation that where a legal action is accepted as a test case, given the potential financial burden imposed on a customer in taking a legal action, the relevant insurer should agree to pay the reasonable costs of these customers. This means customers should not experience financial loss as a result of being a plaintiff in test case litigation, in circumstances where such litigation would resolve issues of dispute for wider groups of customers.

The Central Bank is working constructively with all the sectors it regulates, recognising the challenges they face to maintain continuity of business and provision of service to customers in light of the global public health emergency caused by COVID-19.

Our core focus is on ensuring that the financial system can continue to provide services to households and businesses at this difficult time. We also expect regulated firms to have appropriate contingency plans in place to be able to deal with major operational events should they occur.

The retail banks and credit unions have business continuity plans, including contingency plans, in place on how to assist you if there are branch closures due to business disruption.

We expect banks to have alternative arrangements in place so that they can continue to provide services to you, including information on how to access banking or credit union services if some branches or offices have to close. We will continue to work with banks and credit unions to ensure that where they have to take the decision to close certain branches, that small businesses who do not have online facilities will be able to avail of an alternative means to access their account. We expect firms to communicate with you to let you know how you can access their services.

We expect regulated firms to have appropriate contingency plans in place to be able to deal with major operational events, should they occur, and we are engaged with firms across the financial system to ensure that firms are responding effectively to the evolving situation.

We expect banks and credit unions to have alternative arrangements in place so that they can continue to provide services to you, including information on how to access banking and credit union services if some branches or offices have to close. We will continue to work with banks and credit unions to ensure that where they have to take the decision to close certain offices or branches, that small businesses who do not have online facilities will be able to avail of an alternative means to access their account. We expect firms to communicate with you to let you know how you can access their services.