2011-11-04 Code of lending to SMEs

The Central Bank of Ireland has published a updated version of the Code of Conduct for Business Lending to Small and Medium Enterprises. The updated Code will take effect from 1 January 2012. The updated Code is itself to be fully revised in 2012.

Under the changes, lenders will be required to meet a number of revised provisions when working with SMEs to address financial difficulties including the provision of information relating to:

• The lender’s procedures for dealing with SMEs in financial difficulties, including timeframes involved;
• The importance of an SME engaging with their lender to address their financial difficulties;
• Details of fees or charges that may apply to the SME as a result of financial difficulties and information on methods to mitigate such fees or charges;
• Details of the type of information the lender may require from the SME when assessing their case; and
• Information on the SME’s right to appeal a lender’s decision on a lending arrangement.

Additional new provisions introduced in the Code require that:

1. Lenders must confirm to the SME the information that must be provided by them for an alternative repayment arrangement assessment to be undertaken.  
2. A lender must complete its SME alternative repayment assessment and inform the SME of its decision within 15 business days of receiving all information required from the SME.
3. A lender must have procedures in place to allow an SME to appeal their decision on an alternative repayment arrangement. 
4. Where an SME is concerned about meeting repayments and approaches the lender, a lender must offer the SME an immediate review meeting to discuss their circumstances and assess the potential for the SME to be offered an alternative repayment arrangement.  

Click here for a copy of the updated Code.