Permanent TSB's business borrowers now have more power to appeal loan refusals

PERMANENT TSB HAS announced that it is joining the Credit Review Office (CRO), the state-backed body that provides a credit appeals process for SMEs that have been refused credit by banks or had their credit lines cut.

The announcement comes a month after the Central Bank introduced new regulation requiring lenders to give more information around refusing loans to SME customers.

The bank says that it has joined on a voluntary and non-statutory basis. AIB, Bank of Ireland and Ulster Bank are currently covered by the CRO.

A spokesman for Permanent TSB told Fora: ”We’ve joined the Credit Review Office because it shows that we want to make our SME lending offering as customer-friendly as possible. We want to give customers the assurance that we are committed to making good, professional lending decisions.”

John Trethowan, head of the CRO, welcomed the decision.

Central Bank of Ireland

Regulation

Under the Central Bank’s new rules for loan rejections, lenders must provide borrowers with written reasons for declining credit, contact borrowers who have been in arrears for 15 working days, and warn them if they are in danger of being classified as ‘not co-operating’.

The rules currently apply to regulated lenders, excluding credit unions, but will be extended to credit unions from the start of 2017.

At the time of the rules announcement, Patricia Callan, director of the Small Firms Association, told Fora they would help SMEs improve their loan applications.

“One of the big things we would have got from feedback would be that there is usually a standard rejection letter which is like a drop-down menu. Going into specifics can let you improve your application which is very important, as are deadline and feedback times,” she said.

Permanent TSB chief executive Jeremy Masding

SME market

Permanent TSB, which has 77 branches nationwide, re-entered the SME market in December 2015 in a bid to diversify from its mortgage products.

Figures from the Central Bank show that the Irish market for lending to SMEs is dominated by Bank of Ireland, AIB and Ulster Bank with a combined market share of 95%.

Last month, Permanent TSB announced its first half-year profit since 2007, which saw the bank deliver a net return of €80 million, compared to a loss of €410 million for the same six-month period in 2015.

When announcing the results, Permanent TSB’s chief executive Jeremy Masding said the bank has plenty of capital available, but wouldn’t lend to businesses it doesn’t deem creditworthy.

The CRO appeals process applies to small- and medium-sized businesses, including sole traders and farmers, with fewer than 50 employees and a turnover of up to €10 million. It can only conduct a review after an individual has gone through their bank’s internal appeals process.