2025-12-17

As there are no amendments tabled for Report Stage we now proceed to Fifth Stage.

Sinn Féin is not opposing this legislation. I know the Minister is stepping in for Deputy Troy. I want to express my condolences to Deputy Troy and his family on the passing of his father. Our thoughts are with him at this difficult time. I want to say two things in relation to this legislation. We facilitated the quick passage of this legislation. We support the Credit Review Office. We have signposted many of our constituents to go to the office. I have tabled amendments to have a wider discussion in relation to its functions and to the fact that many businesses are not able to get credit now. They are relying on non-bank lenders. There are serious questions in relation to people having to turn to the shadow bank sector. However, the reason we were asked to bring this legislation in quickly is that this was set up through the NAMA legislation, and we were told NAMA had to be dissolved by the end of the year. As the Minister of State knows, NAMA was supposed to be dissolved under an agreement with the European Union in 2021. There was a review carried out prior to that. An extension was given very explicitly on the following basis: NAMA commits to disposing [of] its residual residential loans before the end of December 2025 and it is intended that NAMA will be dissolved by that date subject to outstanding litigation. We had the heads of Bill in the finance committee a year and a half ago. This has been on the priority list of every Government since - in every session - but we have not heard a dicky bird about this legislation, so I really question what is happening here. We have a CEO of an organisation that does not even exist, a CEO who was supposed to go to a makey-up job for the €430,000 he was on, but that had to be withdrawn when the public focused on it. There are serious questions about this. The legislation was being fast-tracked and accommodated. We were happy to accommodate it, and I made the argument that this had to be done before the end of the year, but it now appears it did not have to be done before the end of the year. Is there an agreement with the Commission to extend the NAMA legislation? If so, until when? The Minister of State may not hold the relevant note at this point. I know he is stepping in for the Minister, but I would appreciate if a note could be sent to me if the relevant information is not available to him. I am happy to support the legislation as drafted.

I appreciate the Deputy's understanding of the situation in relation to the Minister of State, Deputy Troy. My understanding is that the Commission is aware that the Government intends to move ahead with the dissolution of NAMA in 2026 and that there has been a discussion in that regard. I will ask the officials to prepare a more comprehensive response that addresses Deputy Doherty's question. I thank him for facilitating the early passage of this legislation. He and I are well aware through our work in our constituencies of the importance of such an office and the benefit that accrues from it to our constituents. I thank all the Deputies for their contributions to the debates on the Bill as it has proceeded through the House. The work that the Credit Review office has done since it was established in 2010 has given valuable assistance to viable SMEs and farm businesses in obtaining bank credit. Placing the office on a firm statutory basis recognises that value and endorses the Credit Review service as a permanent feature of the SME credit landscape in Ireland. We all know that from time to time there are different fluctuations in markets and different issues that arise. We have seen that Covid, the war in Ukraine and other national and international events that take place can have short- and medium-term impacts on small and medium-sized enterprises and can affect their potential credit rating. Therefore, it is important that this office would have a solid footing. The credit reviewers' recommendations have resulted, so far, in banks agreeing to make €86 million in credit available to SMEs and farm businesses. Between the actual reviews conducted and the advice given directly via its helpline, or more generally through its useful publications or advocacy work, Credit Review has provided a valuable service to thousands of Irish SMEs. More importantly, it has contributed to an improved culture in the banking sector in the period since the financial crash, where there is an expectation that banks will treat their customers better and with due regard to the best interests of those customers, including SME customers. Borrowers can apply to Credit Review not only if they are refused a new loan but also if an existing loan facility is withdrawn or reduced. I am conscious, as I said, of some of the national and international issues that can arise. Earlier, Deputy Doherty and I were here discussing the impact on the fishing community and some of the small to medium-sized enterprises involved and talking about their need for credit to get them through a difficult time, so yet again we see the importance of such an office. While the Bill is, in one sense, merely a technical exercise in providing a legal basis for the continuance of the status quo, it is also a declaration of the Government's expectation that borrowers be treated fairly and with high standards of professionalism. The Bill provides for an expanded role for Credit Review in the future should the evolution of the SME credit market justify that. This underlines the Government's ongoing commitment to support the growth and development of the SME sector. Section 2 provides the Minister with the power to extend the scope of the Credit Review service to other classes of regulated non-bank lenders, should that be required in the future. Before exercising that power, the Minister would need to be satisfied that such a change was justified in light of developments in the SME credit market. In that context, the Minister will continually monitor developments in the SME credit market in order to assess whether the exercise of that power would be appropriate. In deciding to extend the scope of the service, the Minister must have regard to the extent to which demand by borrowers for credit is being met by regulated financial service providers, the importance to borrowers and the economy of the State of particular types of credit provided by the class of lenders concerned, and the amount of credit provided by that class of lenders. For a variety of reasons, increasing numbers of SME borrowers are availing of credit facilities provided by various non-bank lenders. Some SMEs choose to borrow from non-bank lenders because those lenders are offering specialist products that more closely match the particular needs of a given business. For example, a significant amount of non-bank lending to SMEs is provided by specialist property lenders and asset finance providers. Other non-bank lenders specialise in leasing and invoice discounting. In some cases, non-bank lenders may provide faster decision-making and better customer service but this service may be priced differently. They may also have a higher risk appetite than the banks and may, as a result, be willing to lend to SMEs that might otherwise struggle to obtain credit. The overall effect of the presence of non-bank lenders in the market is to provide greater competition in the market for SME credit, and more options for SME borrowers to access more diverse sources of financing apart from traditional bank-provided credit. This will help businesses to grow and thrive, driving increased investment, innovation and productivity without excessive dependence on the banking sector for finance. The Department of Finance will continue to monitor developments in this area and, should further change be necessary, appropriate legislative provision can be considered in the future. While there has been a decline in net bank lending to SMEs in recent years, the evidence, including the Department of Finance's annual credit demand survey, indicates that this is due to muted demand rather than a lack of supply. In other words, viable SMEs that are seeking bank credit are, in the great majority of cases, successful. If there are SMEs whose applications for bank credit are refused, or whose existing credit facilities are withdrawn or reduced, I strongly urge those SMEs to approach the Credit Review service for assistance, which I have no doubt they will find helpful. The Central Bank's SME regulations also provide protections for SMEs when they are either applying for or have credit facilities from regulated financial service providers, giving SME borrowers transparency around the application process. Under the SME regulations, lenders must offer borrowers the option of a meeting, which includes a credit review, at least once a year. Lenders must also provide borrowers with specific written reasons for refusing or withdrawing credit. The SME regulations also include various protections for SME customers who are in arrears or may be at risk of going into arrears. Under the regulations lenders must have an internal appeals procedure in order that borrowers can appeal a decision in relation to a credit decision. Furthermore, the general principles of the consumer protection code apply in respect of all customers, and the definition of consumer includes small businesses with annual turnover of less than €3 million, rising to €5 million from next March. The Financial Services and Pensions Ombudsman is also available to assist borrowers who believe they have been mistreated by a regulated financial service provider. The existing Credit Review office has been operating quite effectively on its current legal basis. It is timely to bring this Bill forward now due to the fact that the NAMA legislation is due to be repealed. The work of the Credit Review office has not been inhibited in any way by the fact that the Bill is being enacted now rather than earlier. This has allowed other work to be undertaken that is more time sensitive. I thank the officials and TDs in this House for their co-operation this evening. The Bill places the Credit Review service on a firm statutory footing in order that it can continue to provide a valuable service to SMEs across Ireland. I commend it to the House.

The Bill will now be sent to the Seanad.