Rose Conway-Walsh Raises Concerns Over SME Credit Records

Minister, I want to ask you if businesses who've had their credit scores reduced during the COVID-19 pandemic and the potential impact that this could have now on their ability to borrow, given the extremely difficult year and a half that we've been through, the huge impact it had on many businesses as they've seen unprecedented restrictions on their ability to operate, what assurances can you give to businesses and to sole traders about their credit rating for the future? Thank you very much, Deputy. One of the Department's main concerns is to ensure that SMEs have access to sufficient lending or liquidity and that access to credit for SMEs is maintained. The Government has announced a range of measures to assist companies to deal with the consequences of the COVID-19 restrictions and to ensure that they have access to sufficient lending. Mr. Lenders are obliged under the Credit Reporting Act of 2013 to submit information to the Central Credit Register, the CCR. Submissions of information to the CCR must be consistent with the arrangements agreed and in accordance with lenders' obligations under the Credit Reporting Act of 2013. I would say to the Deputy that the CCR does not produce credit scores, rather the information on a credit report provided by the CCR is factual in nature and the information is provided to the CCR by lenders. It contains no guidance, recommendation or prohibition for lenders on what decision they should make on an application for credit or repayment arrangements agreed with borrowers. Subject to complying with applicable law and regulatory requirements, it is a matter for lenders of course to make their own lending decisions in accordance with their own credit policies and risk appetites. The central bank as the regulator has advised lenders that in their reporting to the CCR they will need to apply judgment for example around whether a restructure has been agreed in response to an identification of financial distress and should be reported as such. The central bank's SME regulations also set out required treatment of SMEs by regulated entities in relation to the various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security, credit refusals and withdrawals, the handling of complaints, the managing of arrears and having in place policies for engaging with SMEs and financial difficulty. Thank you. Thank you Minister. Minister, I think that misses the point a bit in that how extraordinary the situation is that businesses found themselves in. So when we were at the beginning of the pandemic, when absolutely suddenly and without warning revenue streams were cut off from businesses, yet they had as you know a lot of fixed costs and bills that they had to pay. Many businesses couldn't pay those bills at the time in the way that they normally would. So they found themselves having to default on debt. And I suppose what I want to know is what do you have in place for those businesses? I know and I welcome the business supports that came thereafter. But for that particular time when businesses, what I don't want is a situation where businesses now find that they are up and running at last, but they need an overdraft or they need a loan and they find that they cannot get that because of their credit rating being downgraded through no fault of their own from that of the beginning. And I think that they need assurances for that. And I know that you will agree that we need to save every possible viable but vulnerable business that we can. I would respectfully say to the deputy, I don't believe my answer missed the question she put to me. She asked me a question about credit scores. I made the point that we don't have, we have credit records rather than credit scores. And I did outline the way in which that will be dealt with by banks and by our regulator. But what I do agree with the deputy on is of course, we do want to put in place the supports which we have in place to give every business that is viable but currently vulnerable, every prospect of being able to survive this awful pandemic. In terms of the engagement that I have had with the SME community in relation to this matter, so far and to date, deputy, I have not yet seen the demand for additional borrowing that you may have expected. And I believe the reason for that is to date. The array of business supports that we have put in place, direct payments from the state, has meant that the demand for credit hasn't been as high as I would have expected. But I am going to keep the issue under review because I do believe deputy will get to a point in which the demand for credit will grow. But I do believe we have a banking system that can recognise the difficulty that SMEs were in during the pandemic and still be in a place to lend to companies that are in a position to take on that additional debt. Thank you, Minister, and I appreciate what you said there. But can I bring to your attention that businesses have been contacting me who have found that when they have looked at their credit rating, that their credit rating has been impacted because of their inability to meet bills, particularly at the beginning of the pandemic. And I think it's something that we need to be aware of and something that we need a quick response to in order to ensure that every business that possibly can can stay open because of the employment that obviously those businesses create and the importance for small towns and big towns and areas in rural Ireland. We need to keep these business open. And I would just ask that you would just listen to that and maybe just hear that there are some problems there and we don't want them to grow any bigger than they are at the moment in terms of credit rating so that people can go on and trade out of the horrific time that they've been in. Thank you. I do very much agree with what the deputy has said, that in towns and in villages all over our country, we have small businesses that are even more important than they normally would be. This is why the government has put in place so many supports to help those businesses. It's why we have the warehousing of tax liabilities. It is why we have an employment wage subsidy scheme that is due to continue until the end of this year. It is why when a small business leaves the Covid restrictions support scheme, many of them will receive a significant payment to help them with their reopening. It is for all of those reasons that I think we are yet to see what the demand for demand for borrowing could be. And I think that demand will develop, if it does develop, later in this cycle of recovery. And of course, deputy, I will keep it under review, but from the work that the central bank are doing at the moment, and from the work that I see our banks doing, I believe all is being done to meet every credit need that is sustainable and affordable for businesses that are trying to reopen at the moment. But I think the demand for credit is yet to come.