SI 281 2010 European Communities (Consumer Credit Agreements) Regulations 2010 (‘Credit Agreement Directive”) with an obligation to assess creditworthiness of consumers.
Obligation to assess creditworthiness of consumers
11 (1): Before concluding a credit agreement with a consumer, a creditor shall assess the consumer’s creditworthiness on the basis of sufficient information,where appropriate obtained from the consumer and, where necessary,on the basis of a consultation of the relevant database.
The Central Bank then say in a letter on Prudent Lending:
"The borrower should also be required to produce any other supporting documentation to assess creditworthiness (e.g. proof of income, current account, credit card and other mortgage statements).
We expect that all additional credit applications will be supported by adequate evidence to illustrate that appropriate credit assessment has taken place and that such evidence will be retained on file and be available to us in the event of an inspection.”
The Directive (as implemented) is much softer than the CBI letter - but even the letter has stated 'adequate evidence' and then also states:
“… In order to fully assess a borrower’s ability to repay the loan, the Central Bank’s expectation is that you will avail of at least one of the following:
1. Employ the services of a suitable credit bureau or credit reference agency;
2. Require the borrower to obtain confirmation from the private dwelling mortgage lender on the payment status of their mortgage.
3. Require the borrower to provide an up to date mortgage statement covering a 12 month period;
4. Such other process employed by you to determine if the borrower is in arrears on their mortgage.”
So confusion reigns as the Credit Directive applies on loans over €200 (two hundred euro).
Some would say that the Central Bank overreacted to the unsubstantiated horror stories told by weeping Bankers that mortgage customers were paying Credit Union loans ahead of the mortgage ..and so the CBI reacted.
So if you were a Credit Union what would you do?
Mind you the $64 questions:
How many banks were not rescued in Ireland? Answer NONE
How many Credit Unions (out of 400 failed)?