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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
The provision of credit (cash loans) to natural persons is subject to regulation in Ireland under the Central Bank Act 1997 as Retail Credit Firms. Retail Credit Firms are regulated entities, required to be authorised by the Central Bank. They are subject to a range of business requirements, including the Consumer Protection Code 2012, the Minimum Competency Code, anti-money laundering legislation, and fitness and probity standards. The proliferation of digital financial services has led to the offering of ‘buy now pay later’ arrangements (“BNPL”). BNPL providers offer consumers the opportunity to purchase products/services and to defer payment in full until a later date. The payment process is usually structured as a part payment at the point of sale (online or in-store) with further payments to complete the purchase at a specified date in the future, usually within a few months. To date, this has fallen outside of the current regulatory rules, but proposals are under consideration to regulate such BNPL arrangements.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
On 23 June 2021, the Minister for Finance published the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021 (“the Bill”). The Bill, if enacted in its current form, is likely to bring the BNPL sector within the scope of Irish financial regulation. The Bill extends the definition of “credit” in the 1997 Act by including within the definition “deferred payments” and “other similar financial accommodation” alongside cash loans. It also extends the definition of “retail credit firms” to cover businesses providing direct or indirect credit. These extended definitions potentially bring BNPL providers within the scope of the regulatory regime for Retail Credit Firms, even where they provide credit indirectly via retailers.
Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area
N/A.
Economic conditions
Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area
A report from research group Research and Markets published in July 2021 found that the Irish buy-now-pay-later market is expected to grow by about 50 % a year to reach about $1.2 billion (€1 billion) by 2028. It is currently worth about $267 million.
Additional comments regarding the economic situation for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services or what FinTech’s must be aware of in this business area
N/A.