The Central Bank has asked lenders to rerun thousands of credit checks after it admitted its Central Credit Registry (CCR) was not working properly on June 8 and 9, the Irish Independent can reveal.
However, the Central Bank declined to say whether loans were improperly approved and drawn down by borrowers in arrears due to problems with its system.
The number of borrowers whose loans were approved in the relevant 9 p.m. period is unclear, but the CCR handles approximately 7,000 queries per working day for lenders who rely on loan repayment records that he retains to make loan decisions.
The Central Bank said it became aware of the issue on the second day of the incident and contacted lenders to inform them of an issue before recommending that all queries executed during the affected period be resubmitted at no additional cost. .
A spokesperson said action was taken immediately and the issue was resolved in accordance with its procedures.
However, the Central Bank said it could not take responsibility for incorrectly accepted and drawn loans due to the situation.
A spokesperson for the Central Bank said it was not responsible for lending decisions because lending policy is an issue for individual businesses and credit reports are only one factor in the assessment borrowers.
“Credit reports are important, but they are not the only things that lenders can use to make in-depth assessments of a borrower’s creditworthiness and suitability.
“It is up to each lender to decide their own credit policy and the terms of a loan application,” the spokesperson said.
Given the broad powers the regulator wields over banks, sources said that view is unlikely to be formally challenged. All lenders contacted declined to comment.
Banks processing loan applications were unaware that there was a problem until the message asking them to re-draw their checks was issued by the regulator.
Sources within banks say that in most cases there is a lag between credit checks and taking money, especially for large loans such as mortgages. All of these larger cases have been rechecked.
However, companies that offer fast loan decisions may have issued funds based on unreliable data.
It is understood that problems arose when the CCR changed certain validation processes without informing the lenders who rely on the files.
The incident is embarrassing for the Central Bank, which has issued stiff fines and warnings to companies it regulates for IT outages and for failing to handle outsourced functions.
Leaders of regulated firms will also take note of the lack of transparency from their regulator, which informed banks, but not the public or policymakers, that there had been a serious incident with a system that the Central Bank is legally mandated to to exploit.
The troika identified the need for a reliable register of all borrowers as a key post-financial crash reform in 2010, after EU and IMF officials were shocked to discover the scale of the debt accumulated by individual promoters before the collapse, in many cases across a number of lenders who were unaware of each other’s exposure.
Individuals are not charged for verifying their own records with the CCR, and the Central Bank said individual users were not affected by the issues this month.