-
 Thailand's
example is very interesting, as it illustrates how legislation
can support or hinder the work of credit bureaus. Two private
credit bureaus started services in early 2000, a couple of years
before the Central Bank finalized the Credit Information
Business Act that went into effect on March 14, 2003. During the
drafting period (2000-2003), Parliament spent a great deal of
time changing the law's contents, specifically: turning the Act
into a consumer protection law, tightly regulating how bureaus
do business and imposing heavy criminal penalties (five to ten
years in jail) on members and bureaus for small and likely
mistakes.
After the law was passed, the two existing credit bureaus were
faced with a number of legal issues. Both had to suspend
operations for three months to undergo a compliance review and
ensure that systems were in place for complying with the new
law. They reopened for business only after a comprehensive
consultation process between the government and international
experts took place and the regulation was revised. Now credit
bureaus need to follow a code of conduct to assure consumers of
their privacy. With this new law, both regulators and the credit
bureaus have committed to protect consumers' personal
information.
Mr. Leon Chee, Director, Credit Bureau Solutions,
Dun & Bradstreet
-
Credit cards were widely used in Hong Kong, especially between
1998 and 2001. As banks competed for a share in the market and
eased their lending standards, some borrowers were able to
obtain several credit cards from different banks and the credit
limits they were granted far exceeded their repayment
capability. As a result, there were a large number of cardholder
bankruptcies and this caused caused banks many problems. One
reason for the high number of credit card delinquencies in Hong
Kong during this period was the banks' inability to accurately
assess the financial position of individual borrowers. Although
lenders in Hong Kong had been sharing credit data through a
private credit bureau since 1985, participation in the credit
bureau was not compulsory and banks did not cooperate. As a
result, there was no comprehensive database of credit
information.
In 1998, the banks finally reached consensus on sharing consumer
credit data, but only regarding negative information (as they
were restricted by the Code of Practice on Consumer Credit
Data). Positive data, including the level of debt and repayment
records, could not be exchanged. The sharp increase in credit
card delinquencies in 2001 highlighted the need for positive
credit data sharing. In March 2002, relevant industry
organizations submitted joint proposals on the issue to the
Privacy Commissioner for Personal Data. After consultations, the
Commissioner revised the Code to allow lenders to share positive
consumer credit information from June 2003 onwards.
Ms. Galina Ho, Senior Manager,
Sales & Marketing, TransUnion Hong Kong
-
 When
establishing a credit bureau a few years ago, Singapore faced
the same problems that Vietnam is facing now. Should the credit
bureau be public or private? What is the best way to ensure that
banks share information with the bureau? It took over a year for
Singapore to come up with a model in which 75% of the credit
bureau was owned by a private company and 25% by the industry
association; this meant that all banks would have a stake in the
bureau and thereby ensured their commitment. In the meantime, it
was necessary to have the Central Bank of Singapore (MAS) behind
the process to set up the bureau and help it move forward. Since
the credit bureau had custody of very sensitive data, the
Central Bank also played an important role in making sure that
the credit bureau followed strict procedures so as to prevent
data abuse and privacy violations. Now the Central Bank is more
comfortable with allowing the private bureau to lead. Most of
the initiatives now come from the bureau, after discussion at
the Board level and consultation with the Central Bank.
The most important challenge in establishing a credit bureau is
to persuade banks to share information, even though they may be
aware that they all have a stake in the bureau. In the end,
banks understand that running a credit bureau is not their core
business, so they basically let the private credit bureau run
the show.
Mr. William Lim, Executive Director,
Infocredit Holdings Pte., Ltd.
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