The purpose of the Credit Review Bill is to establish a new statutory body, the credit review service, in place of the existing Credit Review Office. Credit Review is a body under the aegis of the Department of Finance and was established by the Minister for Finance in 2010 under section 210 of the National Asset Management Agency Act 2009 with the objective of facilitating access to bank credit for viable businesses. It provides a valuable service to SMEs and farm businesses that are having difficulty obtaining bank credit. It offers an independent review of a credit decision where a loan application is declined or where an existing credit facility is reduced or withdrawn.

In the years since it was established, the Credit Review Office has proved to be an invaluable source of support and information for Irish SMEs. In addition to its primary task of providing an appeals service for SMEs that have had their applications for credit - up to €3 million - turned down by Irish banks, it publishes information notes for SMEs on topical credit-related issues and regularly gives expert advice on SME lending to the Department of Finance and other stakeholders. The Credit Review Office's small team includes a panel of expert professionals with front-line SME and farming enterprise finance expertise. It performs its functions with an annual budget in the region of €500,000.

From its establishment in 2010 until the end of December 2025, the credit review service received 1,468 formal applications. Of these, 1,038 have reached a final conclusion, with the office upholding appeals in favour of 608 borrowers. The upheld appeals resulted in banks agreeing to make €86.35 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, particularly in ensuring that banks provide reasons for rejecting credit applications. Credit Review's work also provides valuable insights into SME performance and the market for lending to SMEs, which support the work of the Department of Finance and other bodies in this area.

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 of securing 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, the Government has decided it is appropriate to create a stand-alone legal basis for Credit Review and ensure that it continues its important work into the future. That is the purpose of the Credit Review Bill, which I am here to present.

The Bill establishes the body to be known as the credit review service on its own stand-alone legislative footing rather than the existing legal basis of the 2009 Act; replicates matters currently set out in guidelines issued under section 210 of the NAMA Act and SI 127/2010; codifies procedures that have developed as practice over time; and provides a means to extend the functions currently performed by Credit Review to other regulated financial service providers, if the Minister for Finance considers it necessary in the future, to take account of the service's changing operating environment.

The Bill follows an impact assessment carried out by the Department of Finance that 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 wide range of stakeholders, including the Central Bank of Ireland, the Department of Enterprise, Tourism and Employment, the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Enterprise Ireland, the Competition and Consumer Protection Commission, industry representative bodies in the banking and SME space, and 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, this Bill seeks to maintain the current practices of Credit Review when it becomes the credit review service. I will outline these practices now before turning to the specific provisions of the Bill.

The key role of the Credit Review service is to help SME and farm borrowers who have had an application for credit of up to €3 million declined or reduced by participating banks where these borrowers believe they have a viable business proposition. The service also looks at cases where borrowers consider that the terms and conditions of an existing loan or new loan offer are unfairly onerous or have been unreasonably changed to their detriment. 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 credit institutions lending to SMEs under Irish law, currently AIB, Bank of Ireland and Permanent TSB, participate in Credit Review service appeals. The Bill provides, however, that the Minister for Finance can include other regulated 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 applicants for reviews. This funding model is intended to continue.

The Credit Review service maintains a helpline for SMEs that offers expert guidance and can assist in resolving disputes prior to escalating to a formal appeal. Up to the end of last year, the helpline had provided assistance to 5,695 callers.

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 and 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 athbhreithniú creidmheasa.

Sections 1 to 4 provide for the Short Title, the commencement, definitions that pertain to the Bill, the prescribed amount of a loan that 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 of between €1,000 and €3 million. It is planned to maintain these thresholds. However, the Bill foresees the possibility of raising the upper limit to €5 million in the future if it is justified by the SME lending environment.

Sections 5 to 7 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 outline the functions of the service, define 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 cover accounts and audit, the credit reviewer's appearance before the Committee of Public Accounts and accountability to other Oireachtas committees. It sets out the obligation on the service to prepare an annual report as well as ad hoc reports related to the functions of the service and a three-yearly strategy statement.

Furthermore, it addresses the liability of the service and the credit reviewer in handling confidential information.

Sections 25 to 27, inclusive, contain provisions in relation to the review of credit decisions, lending practices and activities of banks. Sections 28 and 29 set out how the credit review service will be financed. Here, the Minister for Finance is empowered to create regulations to permit the service to levy fees on SMEs that apply for reviews, and on the banks whose credit decisions are reviewed. This will permit the current arrangements to continue. These fees and levies will ensure the credit review service is fully self-financing.

The SME fees will be nominal. Currently they are linked to the value of the borrower's credit request, capped at €250. Banks within the scope of the Bill will pay the remainder of the credit review service’s running costs, which are expected to remain modest given the nature of the functions under the Bill. Enterprise Ireland provides services with advances, office space, human resources, information technology service and seconded personnel for which it is to be reimbursed, as outlined in the memorandum of understanding.

Section 30 provides for the service, upon request from the Minister for Finance, to conduct a review of the provision of credit facilities to borrowers by in-scope banks, and the effect of this on the availability of credit. In-scope banks shall be required to provide relevant documents, aggregated data, and commentary for the purposes of the review. Any information and documents provided by the banks for this purpose 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 its 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 39, 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 service to SMEs and farm borrowers. A number of amendments were made in the Lower House, largely of a technical nature, to ensure the legislation will operate as intended. This Bill seeks to maintain, as far as possible, the status quo on 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 bank 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 across the country. A key strategic priority for the Minister for Finance is a well-regulated and sustainable banking sector. This includes promoting access to credit for viable SMEs. The credit review service is an important contributor to this priority and an enabler of success.

I look forward to answering any questions and clarifying any matters relating to this Bill. I commend the Bill to the House.

Gabhaim buíochas leis an Aire Stáit. Glaoim ar an gcéad cainteoir, an Seanadóir Casey.

I welcome the Minister of State to the House. Fianna Fáil will be fully supportive of this Bill.

We have to think back in time to when this service was first introduced. At that time, the banking industry itself was beginning to change. As a business person myself, I know the whole attitude of the bank had shifted away from a one-to-one situation whereby a person walked in to meet their bank manager, who understood them and their business and was there to assist. It moved to a more regional level where there was a gap between the customer and the bank manager or the people making decisions on whether to lend the money. While that was happening, we had the world financial crisis on top of that. It is hard to understand and express how the attitude in the banking industry changed almost overnight. I remember sitting with our bank the year before the crash happened, and it threw millions of euro on the table. One year later, we tried to establish an overdraft facility which, because we are a seasonal business, had been in place every winter for the previous hundred-and-something years, and it was no longer there. That is how bad the attitude within the banking sector became during that whole process. It did untold damage to small businesses, family businesses and farms. That is why the advent of the Credit Review Office was very much welcomed. At that time, we ourselves were 48 hours from picking up the phone and going through that process, but we eventually solved the problem. It is important to have that facility for small businesses or farms which do not have the expertise or the professionalism to take on the banking industry. For them to be able to go to an organisation that can make the case for them has been critically important. I am delighted to see that has been maintained because it is a great support to the industry.

The Minister of State pointed out there were 1,400 reviews in total up to 2023. Some 930 of them were successful, so there was a 60% success rate. Some €83 million was put back into the economy. That saved family businesses and farms, More important, it saved jobs and helped the economy to move forward.

Again, I welcome this legislation. It is critical. As the Minister of State pointed out, it is technical in its nature. The office was originally set up under the NAMA legislation, which we all know has wound down. This gives the service its own legislation. The Minister of State mentioned the limits that are in place. They can be amended by the Minister. I would love to see it promoted more to the sectors that this facility is there for them and they can use it when they do not have their own expertise. I would like to see that promoted more from a Government point of view.

At the outset, I join in welcoming the Minister of State, Deputy Troy, to the House. From the conversations we have had, I know he is passionate about small businesses and their success. Farming is also critical in this context.

We, too, will be supporting the Bill. The purpose or premise of the Bill is to put the Credit Review Office on a statutory footing and to change its legal standing. That is a necessary and recommended exercise and it was explained earlier. It is to give it proper statutory footing into the future and, hopefully, with that, adaptability and strength as it moves forward. It is an interesting point that the Credit Review Office can make non-binding recommendations. That is important in the sense that it can look at local trends and the state of small businesses and agriculture and see developments therein, such as in the context of international developments affecting agriculture or in the context of whatever restrictions might be coming in the future. It allows the office to make recommendations on potential lending policies and more flexibility in a given area to accommodate farmers or small businesses to adapt to given situations. If I understood Senator Casey, who has a particular knowledge of this sphere from life experience - I have a little myself but nothing on the scale that he has - correctly, the Government element must not be taken out of this either. It is not a stand-alone operation. The Minister and the Government would obviously take cognisance of trends and developments and interfacing and interacting with the financial institutions. The Credit Review Office will monitor the credit market and provide guidance notes, etc.

Since its establishment in 2010, approximately 1,400 individual applications of appeal were made and in the region of 1,000 of these reached a final conclusion. That is a very good and important outcome. I know anecdotally from my own constituency work and office of a number of these that have gone through this process successfully, and that is good. The very existence of such a process may in itself have an effect on the banks and financial institutions. The realisation ensures they do due diligence. If they know their decisions could well be the subject of appeal, etc., they will have to do due diligence on them. They can make some arbitrary decisions. Even though, obviously, their policy is to lend money, they do not necessarily have to do so.

I will come to the point about the removal in a minute.

It is important that there be the threat of a supervisory body so that there is fear within financial institutions about every decision they make stacking up.

I would like the Minister of State to be particularly cognisant of a matter. I have come across a lot of evidence through my own work and from just chatting to people of banks arbitrarily selling loans to bodies. I know the bodies they sell them to are subject to regulation in theory. I will not go into individual cases but I have seen evidence and could brief the Minister of State on exact files, with redacted names, involving people whose loans were sold on to other lending institutions. Very arbitrary practices have ensued in those institutions in an attempt to basically extract multiple moneys out of the product they bought at a very cheap price. I would ask the Minister of State to comment on the matter. This is a Second Stage speech, so there is a certain latitude in raising points and this is one I would like the Minister of State to take a look at. It is important to regulate. In theory, all financial institutions are subject to the same rules and regulations. The Minister of State has active constituency offices, so he does not need to be told this, but I will bring him examples with redacted names. It is a reality.

I echo a point made by Senator Casey. I had it in my notes. When I was a youngster, and that is a little while ago, there was a very different atmosphere and lending environment, in that the local bank manager had an intimate relationship with the entire community. The bank manager knew the community and knew people who would starve themselves to pay back a loan. Even if the project failed, that money was safe for the institution. The bank manager also knew the ones who were more like chancers but might have a good business case. The bank manager knew-----

I will not comment publicly on that. The bank manager knew the ones who might be chancers and that, while they might present a very good theoretical framework, it might not be good in reality. The bank manager knew all of that stuff. In latter times - I get this a lot from businesses, farmers and individuals, and we are not talking about personal borrowing - people resent that when they make a proposition to the local institution, the decision might almost be made with a computer programme. It is made in an office in Dublin using a desktop analysis that does not take local considerations and family expertise, tradition, knowledge, integrity and capacity to be flexible and adaptive to different situations into account. Consequently, the Credit Review Office is very important. Any way we can bring those original values into the lending process so that everything is not down to desktop analysis is important.

By and large, the Bill only seeks to regularise what exists by placing it on a statutory basis to give it more strength and flexibility. That is important and I support it. We have to support our small businesses and farmers. I will raise a case from years ago, although I will not go into names. Hotel Kilmore in Cavan was built by a particular local family. The bank would not keep confidence in the hotel at that time. It said the family was overborrowed. Some young genius who had come out of university and done accountancy examinations decided that, after looking at the matter at face value, the family could not go on. The bank put the hotel into receivership or liquidation. That person could not have been more wrong. That family had an enormous tradition and was locally based and, under new management, the hotel went on to thrive and be a phenomenal success. Had there been some sort of body at that time to supervise that exercise and prevent that decision, that family would today be running Hotel Kilmore. It is irrelevant, as the family has done well otherwise and life is fine, but the point I am making is that arbitrary decisions like that cannot be allowed go unchecked.

I welcome the fact that the Government has restored the Bill to the Order Paper for the current Oireachtas session as it committed to do at the end of the previous Oireachtas.

I understand the legislation is required due to the ongoing wind-up of NAMA, which means that the functions of the Credit Review Office need to be put on a legislative footing. Sinn Féin will be supporting the Bill, as the Government has confirmed that it will help guarantee the continuity of the industry funding model, formalise the governance structures of the service and support the enhancement of service's responsibility.

I have spoken to colleagues and they have confirmed that they have used Credit Review and signposted constituents to its services. In some cases, there have been very positive outcomes for small businesses, including farmers. However, one of the potential weaknesses of the Bill is that any recommendation made by the credit reviewer to a bank in favour of a small business seeking credit is non-binding. Some constituents who have been signposted to the service and secured a recommendation that a bank should lend to them have still been refused by the bank. This is something that we will be closely monitoring in terms of banks' compliance with recommendations to reconsider loan applications that have been rejected. It would be a useful proposition for the Credit Review Office to monitor and perhaps publish information on the rate of bank reversals of decisions not to lend based on a recommendation by the service.

I note that the service currently only works with AIB, Bank of Ireland and PTSB and previously worked with Ulster Bank. We now have a range of other lenders in the market. Does the Minister of State have any plan to bring them within the scope of the credit review service?

With regard to Ulster Bank, there is a wider issue with Credit Review. Banks in this State currently lend to businesses across the island, so it would be worth examining the extension of the service to businesses in the North of Ireland that have borrowed from banks in this part of the island. I hope the Minister of State would reconsider whether this could be done in the future as a further protection for Irish businesses and the all-Ireland economy.

I concur with some of Senator Joe O'Reilly's points about the passing on of loans to other organisations and people's very different experiences. One of these issues was raised at the finance committee through correspondence and I have asked the committee to look into it. How these outstanding loans are dealt with by banks passing them on to other organisations is an issue that is coming before us.

Sinn Féin will not be opposing this legislation. The service provided by Credit Review is required and has benefited many small enterprises and farmers across the State.

I thank Senators for contributing to the debate this evening. I thank Senator Casey for sharing his personal experience in terms of the challenges businesses face, particularly during that difficult economic period for the country. I am delighted to see that his well-established and well-performing hotel in Glendalough, which I have visited many times, continues to thrive.

There is a free drink for the Minister of State.

I did not get it the last time I was there, but he was not a Senator at the time, so he did not require the vote.

In all seriousness, this is somebody who is creating jobs in a rural location. That is really what this Bill is about. It is about protecting jobs and businesses. It is not an insignificant amount of money that the office has ensured stayed in the economy.

It is €86.35 million that perhaps would not have been in the economy were it not for the establishment of this office. That means keeping businesses afloat and supporting jobs, so it is very important.

I thank all Senators for their support of the Bill. As Senator O'Reilly said, it is not only the €86 million that has been continued. It is the very threat of the office that has kept the banks focused on ensuring that due diligence is taking place and that they are taking the correct decisions when they are assessing loans. They know that if the decision taken is not right, the threat of referring it to the Credit Review Office is there. That also helps.

In relation to the transfer of loans from commercial banks or high street banks to funds, if those funds do not adhere to the terms and conditions set out in the original loan application, the funds are then acting against legislation. Legislation is there to ensure the terms and conditions for loans that are transferred are honoured.

What recourse do they have? Should that be clearer?

The recourse is through the office of the financial ombudsman. The office of the financial ombudsman is always there when anybody feels any financial institution or pension institution is not acting in an appropriate manner. In the most recent budget, that office received a substantial increase in funding from the State to ensure it could hire more people so that cases could be dealt with in a much more efficient way.

Senator Murphy talked about the number of cases where the Credit Review Office had recommended approval and the banks did not take that recommendation. A total of 78% of recommendations were accepted, with 608 positive cases, which means 22% were rejected. Ultimately, it is a commercial decision for the bank. We cannot force banks against their will, but it has been shown to be hugely positive when there are 78% in the positive.

On the opportunity to extend further, there are provisions within the Bill to allow the Minister for Finance to increase the amount that can be reviewed, from €3 million to €5 million, taking account of how SME business lending evolves into the future. There is also an opportunity to extend it, for argument, to the credit unions. We amended the credit union legislation earlier this year, which allows credit unions lend more to SMEs and non-bank lenders. There is provision within the Bill to look at that into the future, but it was felt that, at the moment, the predominance of cases are going through high street banks. We did not want to put an administrative burden on new non-bank lenders at this stage, but it can be kept under review. Part of the remit of the Credit Review Office is to inform the Minister for Finance of trends, relevant data and whether any particular change is needed.

I welcome the fact that we have broad support across the Seanad and in the Dáil. That is a realisation that all of us in public life are here to support enterprise, SMEs, farmers and, ultimately, jobs. It is good to see that we can work collaboratively on occasions like this.

When is it proposed to take Committee Stage?

Next Tuesday.

When is it proposed to sit again?

Tomorrow morning at 9.30 a.m.