Credit Review Bill 2024: Second Stage

Minister of State at the Department of Finance (Deputy Neale Richmond)

I move: "That the Bill be now read a Second Time."

Credit Review is a body under the aegis of the Department of Finance. It was established by the Minister for Finance in 2010 under section 210 of the NAMA Act 2009, with the objective of facilitating access to bank credit for viable businesses. In the years since its establishment, Credit Review has proved an invaluable source of support and information for Irish SMEs. Its primary task is to provide an appeals service for SMEs that have had their applications for credit, up to €3 million, turned down by Irish banks, namely, AIB, Bank of Ireland and PTSB. It also publishes information notes for SMEs on topical issues and regularly gives expert advice on SME lending by banks to the Department and other stakeholders. It is a body with an annual budget under €500,000 and two and a half full-time equivalent staff members. Credit Review’s interactions with SME borrowers and banks provide valuable insights into SME performance and the market for lending, which are used by the Department.

Since its establishment in 2010 and until the end of 2023, the Credit Review Service received 1,368 formal applications. Of these, 970 have reached a final conclusion, with Credit Review upholding appeals in favour of 579 borrowers. The upheld appeals resulted in banks agreeing to make €82.4 million in credit available to SMEs and farm businesses over those years. In addition to these many specific cases, Credit Review's interventions have led to improvements in practices within the participating banks. It is clear to the Government that Credit Review provides an important service to SMEs and farms throughout Ireland, in supporting them in the process to secure credit from banks.

As I mentioned, Credit Review was set up under the NAMA Act 2009. Since that Act is under review, with a view to winding down NAMA by the end of 2025, the Government has decided it is appropriate to create a stand-alone legal basis for Credit Review, and ensure it continues its important work into the future. This is the purpose of the Credit Review Bill, which I am here to present today. The Bill: establishes the body to be known as the Credit Review Service on its stand-alone legislative footing, changing from the existing legal basis of the NAMA Act; replicates matters currently set out in regulations under the NAMA Act, namely, SI 127 of 2010; codifies procedures that have developed as practice over time; and provides a means to extend the functions currently provided by Credit Review to other regulated financial service providers, if the Minister for Finance considers it necessary.

Throughout the development of this Bill, the aim has been to maintain Credit Review’s current functioning as far as possible. The Bill follows an important assessment carried out by the Department, which recognised the value that Credit Review provides to SME and farm borrowers and the wider lending environment. The Bill has been subject to consultations with a range of stakeholders, including the Central Bank of Ireland, my former home of the Department of Enterprise, Trade and Employment and many other industry and banking representatives, as well as Credit Review itself. The feedback on the proposed continuation of the services provided by Credit Review was positive from all stakeholders.

As far as possible, and following on from the impact assessment and stakeholder consultations, the Bill seeks to maintain the current practices of Credit Review, when it becomes the Credit Review Service. I will briefly outline these practices before turning to the specific provisions of the Bill. The key role of the Credit Review Service is to help SME or farm borrowers who have had an application for credit of up to €3 million declined or reduced by participating banks, and who feel that they have a viable business proposition. It also looks at cases where borrowers consider that the terms and conditions of their existing loan, or a new loan, are unfairly onerous or have been unreasonably changed to their detriment. Further, the Credit Review Service acts as a mediator between those businesses and banks in a process ending with the service making non-binding recommendations to the bank. While the lender is not obliged to accept the recommendations, it must explain if it does not accept them. It is planned to maintain the status quo where Irish credit institutions, namely, AIB, Bank of Ireland and PTSB, participate in Credit Review Service appeals. The Bill also provides that the Minister for Finance can include other financial institutions in scope, if they are of sufficient significance in the Irish SME lending environment.

Credit Review is fully financed by the participating banks and by nominal fees from businesses applying for reviews. This is intended to continue. The Credit Review Service also maintains a helpline for SMEs that offers expert guidance and can assist in resolving disputes prior to escalating to a formal appeal. Further, Credit Review Service officials report to the Department of Finance on their insights on trends in lending to SMEs and agricultural enterprises, which in turn supports policy formation by the Department and others. They also meet frequently with participating banks, trade organisations for SMEs and agriculture, as well as other State entities, to discuss these insights. This important role will be maintained.

I will now outline the sections of the Bill. Credit Review is to be established as the Credit Review Service; in Irish, an tSeirbhís um Athbhreithnithe Creidmheasa. Sections 1 to 4, inclusive, provide for the Short Title, commencement, definitions that pertain to the Bill, the prescribed amount of a loan which may be subject to review, and the making of regulations. Currently, SMEs and farm borrowers can appeal to the Credit Review Service when they are turned down for a loan between €1,000 and €3,000,000. It is planned to maintain these thresholds. However, the Bill foresees the possibility to raise that limit to €5,000,000 in the future, if that is justified by the SME lending environment.

Sections 5 to 7, inclusive, contain provisions in relation to service of notices and other documents and include a standard section on expenses, repeals and revocations.

Sections 8 to 17, inclusive, outline the functions of the service, defines the roles and responsibilities of the credit reviewer and the service staff, outline procedures for his or her resignation, superannuation and removal from office, and address matters related to the engagement of consultants and advisers.

Sections 18 to 24, inclusive, cover accounts and audit, the credit reviewer's appearance before the Committee of Public Accounts and his or her accountability to other Oireachtas committees. It sets out the obligation on the service to prepare an annual report, as well as other ad hoc reports, related to the functions of the service and a strategy statement covering a period of three years. Furthermore, it addresses the liability of the service and the credit reviewer in handling confidential information.

Sections 25 to 27, inclusive, contain provisions relating to the review of credit decisions, lending practices and the activities of banks.

Sections 28 and 29 set out how the Credit Review Service will be financed. The Minister for Finance is empowered to create regulations that permit the service to levy fees on SMEs and on banks. This will permit the current arrangement to continue. These fees and levies will ensure the service is fully self-financed. The SME fees will be nominal. Currently, these are linked to the value of the borrower's credit request and capped at €250. Banks in scope of the Bill finance the remainder of the service’s running costs, which are expected to remain modest, given the nature of its functions under this Bill. Enterprise Ireland provides the service with advances, office space, human resources, information technology services and seconded personnel, as outlined in a memorandum of understanding.

Section 30 provides for the service, upon request by the Minister for Finance, to conduct a review of the provision of credit facilities to borrowers by in-scope banks and the effect of same on the availability of credit. In-scope banks shall provide relevant documents, aggregated data and commentary for the purpose of the review. Any information and documents provided by the banks are to be shared with the Minister for Finance. Furthermore, the service may request representatives of the banks and officers of the Minister to attend a meeting to discuss the information and documents provided. In addition to this primary purpose, the Bill proposes that the service will continue to provide advice to borrowers, and to the Minister and officials, on SME lending matters.

Sections 31 to 38, inclusive, outline transitional provisions and contain consequential amendments to other enactments.

This Bill is a largely technical endeavour to create a stand-alone legislative basis for the Credit Review Service, a body that has been in operation since 2010, providing valuable services to SME and farm borrowers. This Bill seeks to maintain, as far as possible, the status quo of how the Credit Review Service works. This will provide important stability to the users of the service, with the overall aim of supporting viable SMEs to access credit. The Government recognises the importance of SMEs to the Irish economy. SMEs provide the majority of jobs in the State and are a critical source of regional employment in towns and villages throughout the country. A key strategic priority for the Minister for Finance is a well-regulated, sustainable banking sector. This includes promoting access to credit for viable SMEs. The Credit Review Service is an important contributor to this priority and enabler of success.

I look forward to responding to any interventions by Deputies. I commend the Bill to the House.

Deputy Pearse Doherty

Gabhaim buíochas leis an Leas-Cheann Comhairle. Mar an uair dheireanach ag déileáil leis an reachtaíocht sa Teach seo sa 33ú Dáil, guím gach rath uirthi sa toghchán.

Ó thaobh an Bhille seo, mar a dúirt an tAire Stáit, is Bille teicniúil é seo. Is Bille a chuireann an oifig atá ansin ar bhunús dlíthiúil difriúil le hachomharc a dhéanamh ar airgead a chur ar fáil do ghnólachtaí atá ag lorg airgid le luach níos lú ná €3 mhilliún. Faoi seo, tagann an chúirt sin tríd an mBille NAMA a tháinig isteach sna Tithe seo i 2010. Mar atá a fhios againn, tá Bille eile os comhair na dTithe seo ó thaobh deireadh a chur le NAMA agus an IBRC roimh dheireadh 2025. Tá an Bille seo ag tarraingt ar sin mar nuair a chuirtear deireadh leis an Acht sin, beidh ceist ann maidir le cá háit a seasann an t-athbhreithniú creidmheasa agus cuireann seo ar bhunús dlíthiúil é.

Tabharfaidh Sinn Féin tacaíocht don Bhille seo le bogadh ar aghaidh go dtí an chéad Chéim eile, Céim an Choiste, áit a mbeimid ábalta scrúdú a dhéanamh ar na míreanna difriúla agus an dóigh a bhfuil an oifig á reáchtáil. Mar a dúirt an tAire Stáit, ní oifig mhór í seo. Is oifig a bhfuil beirt dhuine go leith ag obair inti go lánaimseartha. Níl costas millteanach ag baint leis oifig agus tá sí mar bhuntáiste do ghnólachtaí beaga ar fud an Stáit. Bhí mé ag déanamh idirbheartaíochta ar son gnólachtaí leis an oifig seo agus d'úsáid mé seirbhísí na hoifige seo san am a chuaigh thart le cuidiú le gnólachtaí nó d'iarr mé ar na gnólachtaí dul go dtí an oifig. Ceann de na fadhbanna atá ann i gcás amháin, mar shampla, d'iarr mé ar ghnólacht dul chuig an oifig seo. Rinneadh athbhreithniú agus nuair a dúradh gur cóir go dtabharfar an iasacht don chomhlacht seo, dúirt an banc go raibh sin ceart go leor ach nach raibh sé chun an t-airgead a thabhairt mar níl dualgas ar bith ar an mbanc an t-airgead a thabhairt ag deireadh an lae. Is laige mhór atá san Acht í sin ó thaobh an athbhreithniú creidmheasa mar atá sé faoi Acht NAMA. Má táimid ar ais, agus tá súil agam go mbeidh mé ar ais agus an déileáil leis an mBille seo, b'fhéidir mar Aire, beimid ábalta díriú ar an mBille seo a láidriú.

I welcome the publication of this Bill. It is coming in on Second Stage in the dying breaths of the Government, so the Bill will fall when the Dáil is dissolved tomorrow, but it can be restored to the Order Paper of the new Dáil. It is important to move ahead with it. I am conscious that there is a timing issue regarding this Bill, because it is interlinked with the ending of NAMA and the IBRC, which is in separate legislation before the Dáil. There is a suggestion that decisions had to be taken by the end of 2024 with the commission, with a full wind-up by the end of 2025, but that may be a separate matter.

There are serious concerns regarding that legislation, and we hold those concerns. The point that was made to the finance committee is that we needed to get this through before the end of the year, and that it was a requirement from the commission, even though the wind-up would take another full year. We and others have expressed serious concerns at the committee that we would wind up NAMA, and, therefore, it would be beyond the reach of the Oireachtas and public scrutiny, despite the fact that we have a massive commission of investigation that is ongoing. In the last week, the deadline for that report, which was the end of October, has now been extended by a number of months into, I believe, June 2025. It is not appropriate, given the level of money that has come through NAMA, the fire sale of lands to support Government policy at the time and the losses that have been incurred as a result. There should be proper scrutiny of that. That legislation should not see the wind-up of NAMA until the commission's report is published and fully scrutinised. All the records of NAMA need to be maintained into the future in order for us to, if need be, delve further into them.

There is no doubt, however, that when NAMA was established, it was provided with €74 million of loans. Even though it paid less for those loans, it is clear that it did not recover anywhere near the book value of those loans. If NAMA had managed them as is in the name of the organisation, the asset value underpinning those loans would have increased significantly, as they have done, and the State would be in a far better way. It is an example of the mismanagement, by Fine Gael in particular, of this arm of the State. We have not lost millions of euro this year; we have lost billions of euro. There are cases where land has been sold from NAMA to a developer and the land has been flipped. The flipping of that land a short while afterwards has resulted in an uplift to the developer of hundreds of millions of euro. I raise that because that legislation and this legislation are interlinked.

The legislation gives a legal underpinning regarding the credit review office, which was established under the NAMA legislation of 2010 and provides it with a legal foundation. It does not really change, in any way, what is in existence and, therefore, we will support this legislation going to Committee Stage, if it is restored in the Thirty-fourth Dáil. It will then give us an opportunity to look into the legislation to see where it can be strengthened. As I mentioned, it is an office I have used on behalf of my constituents. I have not used it personally, but have signposted it for constituents in the past, particularly in the early days following its establishment and SMEs were finding it a bit more difficult. I have been signposting it less often recently. I have not looked at the numbers, but I will if we are in a position to scrutinise this legislation further on Committee Stage. The one weakness in all of this, and I recall one of the cases I asked to be referred to the credit review office, is after the examination, the office's view was the loan should be offered, and the bank in question, which I will not mention, said it that is all well and fine, but it would not loan the money and gave a reason. That is the weakness in all of this. The lending policies of banks are the lending policies of banks, but there is a weakness there. That being said, in other cases, there were reviews and the banks then provided the loan. This is an arm of the State that is better looked at than looked for. It has helped businesses, including ones in my constituency, throughout the years. We will look to see how we can strengthen that in the time ahead. It is a very small office. It only has a small number of full-time staff and a minimal budget, but Sinn Féin is happy to support this legislation to go on to the next Stage, where we will examine it further.

Deputy Brendan Griffin

I also welcome this Bill. It is important that such mechanisms are in place to support businesses throughout the country.

I commend the work of the Minister of State, Deputy Richmond, and his colleagues in the Department on the many pro-enterprise measures they are implementing and the supports they are providing. It is a very difficult time for businesses at the moment, with the cost of business in particular being a massive challenge, among others, but Bills like this are a help and part of the suite of measures to try to assist businesses to grow into the future. I acknowledge the Bill being brought to the House today. I know it will not pass all Stages today, but hopefully it will be one of the priorities in the Thirty-fourth Dáil, whenever that happens in December or January.

As it is my last time addressing Dáil Éireann, I issue a warm, heartfelt thank you to everybody in the Oireachtas. I thank the entire team for all of their support and assistance and service over the past 14 years. It has been a massive honour and a privilege to be part of the Oireachtas. Certainly, from the first day I came in here in February 2011, I always felt very welcome and everybody was incredibly helpful and supportive. There is a fantastic, dedicated team of people who come to work here in Leinster House every day, many of whom are doing it under the radar, behind the scenes and playing a massive part in this country's development and all of the good work that is happening in Ireland. I thank the Leas-Cheann Comhairle for her courtesy and her fairness when she is in the Chair. I also acknowledge Deputy Seán Ó Fearghaíl, the outgoing Ceann Comhairle, who has been a fantastic Ceann Comhairle for the past nine years. He has done a great job and I wish everyone well in the future. I particularly thank the people of Kerry, who elected me to Dáil Éireann three times. It has been an enormous privilege to serve in the national parliament on behalf of County Kerry, first Kerry South, and then the entire county since 2016.

It is an honour that has been bestowed on very few people since the foundation of the State and the pure privilege of that is not lost on me. I always did my best for people. I am sorry if there were things I did not get done. I am glad there were certain things I did get done. Many of us who are here realise that we are only ever passing through Dáil Éireann. We are only here for a while. We do our best while we are here and try to make as much of a positive contribution as we can. Again, I thank the people of Kerry for giving me that opportunity to represent them in Dáil Éireann.

I also thank the Fine Gael Party and members of the Fine Gael party in County Kerry who have campaigned for me in five elections since 2004 at local and national level for their unwavering support over the years, as well as our team of public representatives and councillors in Kerry and former Senators, colleagues and TDs. Their support over the years was always huge.

In particular, I want to thank my family and immediate family for their support always, my wife Róisín and two boys, Mícheál and Brendáin, who will hopefully be seeing a lot more of me from now on. When I came in here, I did not have any children. I am leaving here now with two little boys. They are 11 and nine and I am looking forward to being around for the remaining years of their childhood. It is something that has been a massive influence in terms of my decision to leave here. However, none of it could have been done without the support of my wife Róisín over the past 14 years, who made enormous sacrifices to enable me to be able to continue my career here. I am looking forward to having a normal life at home now over the next while.

To everybody contesting the election, I wish them all very well. It is a difficult and stressful time for everybody, but it has never been as important that we have good people elected to this House into the future. I hope everybody who is contesting the election gets through the campaign safely and soundly. I ask that there would be decency for candidates on the doors. Everyone is stepping forward and basically putting their necks on the line to stand for public office, nearly always for the right reasons. I ask that courtesy would be shown to people who are standing for public office. It is a very difficult job to do. Putting his or her name forward for public office is the most public form of job interview a person will ever do. I hope the election will be fair and that there will be fair treatment of all candidates no matter what their party or non-party background is.

Finally, I acknowledge all my colleagues here in Leinster House as well, that is, the elected Members. Very often on television, people will see the conflict and the arguments and debates in here. Behind the scenes, however, what I leave here feeling most is that there are many friendships across the board and party divides and non-party divides. I leave here after 14 years with so many really good friends and having met so many very decent people who are in politics for the right reasons - to serve their country and serve the public. It has been an absolute honour and privilege to serve with those people as well.

An Leas-Cheann Comhairle

Gabhaim buíochas leis an Teachta as a chuid oibre. Cibé bealach a siúlann sé anois, go n-éirí leis.

Níl aon duine eile anseo. Bogfaidh muid ar ais go dtí an tAire Stáit.

Minister of State at the Department of Finance (Deputy Neale Richmond)

I wish to start off by thanking all Deputies who contributed to this debate. I particularly thank my dear friend, Deputy Griffin, for his contribution not only this afternoon but over the last decade and a half for the people of Kerry at a local and national level. To say he has done the State some service is an understatement. I wish him, Róisín and the boys all the best. I am delighted to confirm for the House that he is stopping on the way home to buy them two full Liverpool kits to wake up to tomorrow. That is the least they deserve. I believe Róisín is into a bit of art; the Deputy might know a guy. I thank the Leas-Cheann Comhairle very much for that indulgence.

I look forward to further discussion of this Bill on Committee Stage, and Deputy Doherty is right that it will be most likely in the next Dáil. I hope that whoever holds this position going forward will proceed with this extremely important legislation. We have been able to thrash through some good stuff today. I and my officials will reflect on all the points raised today.

As I laid out, the purpose of the Credit Review Bill is to establish the credit review service on a statutory stand-alone basis in a manner that closely maintains its current operations. This will guarantee the continuity of the industry funding model, formalise the governance structure of the service and support the enhancement of the credit review's responsibility. It will also provide the option to extend the credit review scope in the future subject to various consultation and other criteria to accommodate other financial service providers lending to the Irish SMEs and farmers that are not currently covered in the National Asset Management Agency Act 2009. I personally hope to see that empowered by the future Minister for Finance going forward. The legislation has been carefully drafted to avoid imposing an excessive burden on those concerned, and the primary aim is to maintain the status quo. I am pleased to present the legislation today. It will ensure that those SMEs that rely on the service can continue to do so. I again thank all Deputies and the Oireachtas committees for their contribution to the development of the legislation to date. I would particularly like to take a moment to thank the officials in the Department of Finance. This was not simple legislation. I know it is a brief debate today at the end of a Dáil term, but it was really difficult legislation that hours of work went into by dedicated public servants. Their work should be recognised in what is very important legislation.

I thank the Leas-Cheann Comhairle for the chairing of this and many debates over my first Dáil term. I very much hope to be back here next month. That is obviously a matter for the people of Dublin Rathdown. Regardless, however, I would like to extend my sincere thanks to all the people who work in this wonderful complex supporting our parliamentary democracy from the Debates Office, Bills Office, the ushers, catering staff and everyone else in between, as well as acknowledging the massive contribution of those colleagues who will not be back after the general election and those who perhaps will be back. To conclude, this is important legislation. I look forward to seeing further discussion on this Bill as it progresses through the House in the next format.

Question put and agreed to.

Dáil Éireann debate - Thursday, 7 Nov 2024