In August 2014, MAS had published a consultation paper on the proposed Credit Bureau Regulatory Framework and Credit Bureau Bill. On 19 May 2015, MAS released its response to feedback on the consultation paper.
Credit bureaus are organisations that collect, use and disclose information relevant for an assessment of a borrower’s credit worthiness (“credit data”). Members of a credit bureau would typically be lenders which would use the credit data obtained from the credit bureau in their loan making decisions.
Presently, credit bureaus are recognised by Monetary Authority of Singapore (“MAS”) under section 47 and the Third Schedule of the Banking Act (Cap. 19). Recognition under the Banking Act enables a credit bureau to receive from banks information on borrowers which would otherwise be protected by banking secrecy. In turn, a credit bureau is allowed to pass on the credit data to its other members for the purpose of facilitating credit assessment by the members. Credit bureaus supplement credit data contributed by its members with information from other sources such as insolvency and bankruptcy data from the Insolvency & Public Trustee’s Office.
To recap, in August 2014, MAS had proposed a new Credit Bureau Act (“CBA”) to establish a more formal oversight regime for credit bureaus because credit bureaus were collecting increasingly detailed credit data to facilitate more comprehensive credit assessments by their members.
Please refer to our previous Client Update on the August 2014 MAS consultation.
2. MAS Response to Feedback
Some of the key issues raised from the feedback received on the said consultation paper and the MAS’ response to them are as follows:
(a) Whether the proposed CBA would apply to credit bureaus that do not collect credit data from banks
In response to feedback asking whether the proposed CBA would apply to a registered commercial credit bureau which does not collect data from banks, MAS has responded to confirm that credit bureaus which do not collect any data from licensed banks would not be within the scope of the new regime.
(b) Timelines for rectification of erroneous data
Some respondents requested for clarification on the timelines that Licensed Credit Bureaus (“LCBs”) and members of LCBs will be required to comply with for rectification of erroneous data.
In response, MAS said it will prescribe the turnaround time for various stages of dispute resolution, such as investigation, updating of erroneous data, and informing other members of the update of erroneous data under sections 17 and 27 of the proposed CBA and associated regulations. The requirements will apply to both LCBs and their members. Existing dispute resolution timelines for LCBs will be taken into consideration. MAS said it will engage the industry on the proposals before finalising these in regulations.
(c) Data Accuracy from non-members of LCBs
Guidance was sought by respondents on the requisite standard for data accuracy, completeness and the contractual safeguards required for data provided by non-members of LCBs.
To this, MAS clarified that while non-members of LCBs are not regulated by MAS, the obligations under the Personal Data Protection Act relating to data accuracy and completeness would still apply. Nonetheless, LCBs should safeguard the integrity of data provided by non-members by stipulating in their contractual agreement with non-members a clear dispute resolution process and acceptable turnaround times for the contribution and rectification of data.
(d) Obligations of consumers when reporting a data dispute with a credit bureau
One respondent had suggested that MAS should establish guidelines requiring consumers to furnish relevant documentary evidence when reporting a data dispute.
To this, MAS emphasised that the new credit bureau regulatory framework is not intended to apply to consumers. Instead, LCBs and their members should institute appropriate processes to verify the disputed data against relevant documentary evidence. Nonetheless, it would be in the interest of individual consumers to provide such documentation to facilitate the timely resolution of data disputes and MAS would work with the industry to educate the public.
(e) Free credit reports to consumers
In the first round of consultation, MAS had proposed to require members of LCBs that have approved or rejected a credit application by a consumer, to provide to that consumer a copy of his credit report – free of charge within a specified period – upon the consumer’s request. The intention behind this requirement was to enable free and easy access by consumers to their personal credit reports.
However, many respondents provided feedback to the effect that this requirement may not be meaningful. It was pointed out that currently a consumer is already able to request for a copy of his or her credit report if the credit bureau had provided a credit report on that customer to a member of the credit bureau within one month preceding the customer’s request. Furthermore, it was pointed out that making it obligatory for the members of a credit bureau to provide a credit report for free whenever a credit application by the consumer is approved or rejected may encourage the consumer to dispute the credit decision made by the bank. There was also concern that by pegging provision of a free report to a credit application, consumers might put in frivolous applications as a pretext to obtain a free copy of their credit report.
Taking on board the feedback, MAS has had further consultations with banks, credit bureaus as well as the Association of Banks in Singapore (“ABS”) on the proposal. MAS noted that the credit bureaus have responded positively to the idea of providing free credit reports. Noting further that ABS will be instituting an industry- wide practice whereby banks would inform consumers in loan application forms of a consumer’s entitlement to a free report from the credit bureau upon a credit approval or rejection decision being made by the bank, MAS has now decided the proposed CBA will require LCBs to provide, upon request by the consumer, a free credit report within 30 days from the date of credit approval or rejection.
(f) Fees for express service
MAS has also clarified that while consumers would be entitled to free credit reports under the conditions stated in the new law, there is nothing to restrict LCBs from charging a fee for those consumers who request for express service in obtaining a credit report.
3. Next Steps
The next step one might expect would be for the Government to table in Parliament for first reading a finalised version of the new Credit Bureau Bill.