Changes to Central Credit Register Reporting Regime
A recent legislative change has closed a loophole in the Credit Reporting Act 2013 (the “Act”) with the effect of bringing HP and PCP arrangements within the scope of Central Credit Register reporting requirements.
The Act requires a provider of credit to report certain information relating to the recipient of the credit and the nature of the credit itself to the Central Credit Register within given timeframes. Exceptions based on the type of credit involved were included in the Act to prevent the imposition of reporting obligations on entities and situations which fell outside the intended scope of the Act. As originally drafted these exceptions included “credit provided for facilitating the purchase of goods or services from the person by whom the credit is provided.” However, it was noted following the enactment of the Act that this exception had the, seemingly unintended, consequence of excluding hire purchase and similar agreements.
This loophole has now been closed by the Markets in Financial Instruments Act 2018 which amended the Act to replace the above exception with an exception for “trade credit”. A definition of what constitutes trade credit under the Act is included and it can be summarised as any credit provided by one business party to another which is required to be repaid within six months and which is for the purpose of facilitating the purchase of goods or services.
Hire purchase product providers should establish if their activities are now covered by the credit reporting regime established under the Act and, if so, take the appropriate internal steps to ensure that they are compliant with this regime.
For further information please get in touch with your usual Whitney Moore contact, Jamie Enright or any member of our Banking and Finance team.