A-G Hits Back At Banks

New law de­signed to help youths ac­cess credit sys­tem, he says

Fiji Sun - - Front Page - JYOTI PRATIBHA

At­tor­ney-Gen­eral Aiyaz SayedKhaiyum has hit back at banks over the Data Bureau row. He said the youths of this na­tion want­ing to utilise the credit mar­ket needed to be treated in a fair and trans­par­ent man­ner. Mr Sayed-Khaiyum said in or­der for youths to ac­cess the credit sys­tem, the credit re­port­ing sys­tem needed to be prop­erly reg­u­lated. He said nearly 70 per cent of our pop­u­la­tion was un­der 40 years of age and young peo­ple join­ing the work­force and util­is­ing the credit sys­tem should re­ceive a fair go. Chair­man of the As­so­ci­a­tion of Banks Kevin McCarthy who is also BSP Coun­try Man­ager wrote to Mr Sayed-Khaiyum rais­ing con­cerns about the Fair Re­port­ing of Credit Act which will see credit re­port­ing agency such as Data Bureau be­ing reg­u­lated. Mr Sayed-Khaiyum ques­tioned the ra­tio­nale be­hind claims that reg­u­lat­ing Data Bureau would lead to banks in­creas­ing their in­ter­est rates.

“It is some­what per­plex­ing that the let­ter re­ceived by the ABIF threat­ens in­creased lend­ing rates due to credit providers be­ing un­able to check the credit his­tory of

Most or­di­nary Fi­jians do not have the fi­nan­cial means to, through the nor­mal ju­di­cial av­enues, seek re­course against an en­tity that is well-re­sourced and owned by large com­pa­nies. It is there­fore only fair that the tainted in­for­ma­tion held by Data Bureau, which was ob­tained in an un­reg­u­lated en­vi­ron­ment, is dis­carded. Aiyaz Sayed-Khaiyum At­tor­ney-Gen­eral In his let­ter to the As­so­ci­a­tion of Banks in Fiji, Mr SayedKhaiyum said the reg­u­la­tions es­tab­lished a le­gal and trans­par­ent frame­work for the reg­u­la­tion of such busi­nesses to pro­tect the rights of or­di­nary Fi­jians.

bor­row­ers. This state­ment is pre­pos­ter­ous as prior to Data Bureau be­ing in ex­is­tence, a de­crease in lend­ing rates was not pub­licly touted as a rea­son for the in­tro­duc­tion of the credit re­port­ing ser­vices per­formed by Data Bureau. Nor was there a re­duc­tion in in­ter­est rates sim­ply be­cause Data Bureau was op­er­a­tional. Ac­cord­ingly, there is no valid rea­son to sur­mise that lend­ing rates will in­crease be­cause credit re­port­ing ser­vices are now reg­u­lated by the Act.”

Since it was re­vealed in Par­lia­ment that a Fair Re­port­ing of Credit Act would mean reg­u­lat­ing Data Bureau, Fiji Sun has re­ceived a huge num­ber of let­ters from Fi­jians ap­plaud­ing this Act. Many com­ments on­line were also re­ceived from youths com­mend­ing the in­tro­duc­tion of this Act. Bill Ro­mana of Nau­sori yes­ter­day again com­mended the reg­u­la­tion of Data Bureau. Mr Ro­mana shared with Fiji Sun how he was given a run af­ter his name was put up in Data Bureau in­cor­rectly. Premila Singh of Ta­mavua shared how she needed to ap­ply for loan to pay for her daugh­ter’s mar­riage and she found out at the eleventh hour that her name was in Data Bureau for a loan that was cleared two years back. Let­ter writer Nardeo Mishra had writ­ten in say­ing: “The Min­is­ter for In­dus­try and Trade said the truth about the Data Bureau in his press state­ment. This was long over­due and I know there are a lot of us in­clud­ing me who have been the vic­tims of Data Bureau. Ever since they started their op­er­a­tions in Fiji they have just col­lected the in­for­ma­tion but never tried to rec­tify it from the peo­ple con­cerned and also the data they have is al­most 20 years old. If I am not wrong our laws do not al­low to hold any more data af­ter seven years which the Bureau failed to fol­low. Thank you min­is­ter and the Govern­ment for your con­cern for the or­di­nary Fi­jians.”

In his let­ter to the As­so­ci­a­tion of Banks in Fiji, Mr SayedKhaiyum said the reg­u­la­tions es­tab­lished a le­gal and trans­par­ent frame­work for the reg­u­la­tion of such busi­nesses to pro­tect the rights of or­di­nary Fi­jians.

“It does not pro­hibit the busi­ness of credit re­port­ing,” he said.

“The reg­u­la­tions in re­la­tion to the Act will in­ter alia pro­tect a per­son’s right to pri­vacy, pro­vides re­dress mech­a­nisms for in­di­vid­u­als and also en­sure that there is no con­flict of in­ter­est be­tween the share­hold­ers of the credit re­port­ing agency and the users of the credit in­for­ma­tion.

“In this re­spect we note that the share­hold­ers of Date Bureau Limited (‘Data Bureau’) (a com­pany that cur­rently per­forms the func­tions of a credit re­port­ing agency), in­clude some fi­nan­cial in­sti­tu­tions, in­clud­ing BSP Life (Fiji) Limited, which is a re­lated en­tity to the Bank of South Pa­cific Limited. Records show that the chair­man of the As­so­ci­a­tion of Banks of Fiji (‘ABIF’), is a share­holder and di­rec­tor of BSP Life (Fiji) Limited, and this in­ter­est has not been de­clared in the Let­ter. Ac­cord­ingly, the claims and ob­jec­tions in the Let­ter can­not nec­es­sar­ily be viewed as an im­par­tial as­sess­ment of the Act by the ABIF as the writer of the Let­ter has an ob­vi­ous pro­fes­sional and per­sonal con­flict of in­ter­est. “Nev­er­the­less, we have ad­dressed be­low the al­leged con­cerns con­tained in the Let­ter.

Reg­u­lated credit en­vi­ron­ment

“Many ma­ture mar­kets have reg­u­lated credit re­port­ing en­vi­ron­ment which is what the Fi­jian Govern­ment wants to de­velop in Fiji. Data Bureau, of which BSP Life (Fiji) Limited is a share­hold­ers, may cur­rently con­tinue to op­er­ate as a credit re­port­ing agency, but must cease op­er­a­tions upon the com­mence­ment of the Act, on a date ap­pointed in the Gazette. Upon the com­mence­ment of the Act, if Date Bureau wishes to con­tinue with the busi­ness of credit re­port­ing, it must ob­tain a li­cence and com­ply with the re­quire­ments of the Act. “Upon com­mence­ment of the Act, credit in­for­ma­tion will be col­lected and pro­vided in a reg­u­lated en­vi­ron­ment, which will en­sure that the in­for­ma­tion is ac­cu­rate and re­li­able.

“This will ben­e­fit the users of the in­for­ma­tion, such as banks and other lend­ing in­sti­tu­tions, as there will be cer­tainty re­gard­ing the cor­rect­ness of the credit in­for­ma­tion pro­vided.

“It will also ben­e­fit hun­dreds of thou­sands of Fi­jians who will be able to par­tic­i­pate in the main­stream fi­nan­cial mar­ket know­ing that there

are fair and trans­par­ent rules gov­ern­ing their par­tic­i­pa­tions and that they have ac­cess to a cost ef­fec­tive and sim­ple com­plaint res­o­lu­tion sys­tem.

Avail­abil­ity of credit in­for­ma­tion

Whilst sec­tion 19 of the Act re­quires all credit in­for­ma­tion held by the credit re­port­ing agency (or an en­tity that per­forms func­tions of a credit re­port­ing agency) to be trans­mit­ted to the Re­serve Bank of Fiji upon com­mence­ment of the Act, the sug­gested con­se­quences of the Act as raised in the Let­ter are un­founded as credit in­for­ma­tion will still be avail­able.

“The pur­pose of sec­tion 19 is to give all Fi­jians the op­por­tu­nity to start over with a clean slate in a reg­u­lated en­vi­ron­ment by re­quir­ing the cur­rent credit re­port­ing agen­cies, such as Date Bureau, to hand over all credit in­for­ma­tion to the Re­serve Bank, the in­de­pen­dent reg­u­la­tor of the fi­nan­cial mar­kets in Fiji.

“This is nec­es­sary as the cur­rent un­reg­u­lated regime has cre­ated a pool of flawed data and un­fair re­port­ing sys­tems which has de­prived ev­ery­day Fi­jians from ac­cess­ing credit thereby re­duc­ing or com­pletely deny­ing them the abil­ity to par­tic­i­pate on a level play­ing field in the main­stream fi­nan­cial mar­ket. It has also, as a re­sult, forced them to use non­main­stream fi­nanc­ing op­tions, such as money­len­ders and loan sharks. “We have re­ceived many com­plaints from mem­bers of the com­mu­nity re­gard­ing the in­for­ma­tion held by Data Bureau, and it is the re­spon­si­bil­ity of the Govern­ment, and it should also be the re­spon­si­bil­ity of the pri­vate sec­tor, to en­sure that any credit in­for­ma­tion stored con­cern­ing a per­son is cor­rect. “Most or­di­nary Fi­jians do not have the fi­nan­cial means to, through the nor­mal ju­di­cial av­enues, seek re­course against an en­tity that is well-re­sourced and owned by large com­pa­nies. It is there­fore only fair that the tainted in­for­ma­tion held by Data Bureau, which was ob­tained in an un­reg­u­lated en­vi­ron­ment, is dis­carded. Upon com­mence­ment of the Act, credit in­for­ma­tion must be col­lected and dis­closed in ac­cor­dance with the Act. “The Act does not pro­hibit new busi­nesses from be­ing set up as credit re­port­ing agen­cies, nor does it pro­hibit the op­er­a­tions of an ex­ist­ing credit port­ing agency. Upon the com­mence­ment of the Act, Data Bureau can ap­ply and get a li­cense to op­er­ate as a credit re­port­ing agency. A per­son that uses the in­for­ma­tion and ser­vices of Data Bureau can con­tinue to do so un­der the rules that are set out in the Act. Ad­di­tion­ally, the Act also cre­ates a reg­u­lated and com­pet­i­tive en­vi­ron­ment to al­low other credit re­port­ing agen­cies to en­ter the mar­ket.”

“It is in­ac­cu­rate to state that no credit his­tory in­for­ma­tion will be avail­able. The Act does not pro­hibit his­tor­i­cal credit in­for­ma­tion from be­ing utilised. His­tor­i­cal credit in­for­ma­tion may be used, pro­vided that it does not come from the pool of data that will be con­fis­cated from Data Bureau, which is known to be in­cor­rect. A bank may still uti­lize the credit in­for­ma­tion held by it to de­ter­mine the cred­it­wor­thi­ness of a cus­tomer. Ac­cord­ingly, credit in­for­ma­tion will still be avail­able, pro­vided that credit re­port­ing agen­cies com­ply with the re­quire­ments of the Act.

“The ne­ces­sity of the Act is high­lighted by the state­ment in the Let­ter that the pro­cess­ing times for loan ap­provals will in­crease be­cause banks will need to seek a cus­tomer’s con­sent to ob­tain in­for­ma­tion about the cus­tomer from the bank.

“A credit re­port­ing agency, which deals with a per­son’s credit in­for­ma­tion, should not be per­mit­ted to dis­close credit about a per­son, with­out his or her con­sent, par­tic­u­larly when there is no mech­a­nism for cor­rect such in­for­ma­tion. “The banks’ re­liance on such in­for­ma­tion has made it nec­es­sary to im­ple­ment the Act and con­fis­cate all cur­rent credit in­for­ma­tion held with credit re­port­ing agen­cies as there has been a cul­ture of util­is­ing in­for­ma­tion from un­reg­u­lated sources with­out the cus­tomer’s con­sent. The Act will re­quire a cus­tomer to give his or her con­sent be­fore in­for­ma­tion is pro­vided in a credit re­port.

“The pos­i­tive credit re­port­ing re­ferred to in the Let­ter will still be avail­able un­der the Act, with the added as­sur­ance that the in­for­ma­tion is ac­cu­rate as it has been pro­vided un­der a proper and trans­par­ent reg­u­la­tory regime. “The penal­ties in the Act are sig­nif­i­cant to en­sure that credit re­port­ing agen­cies take the nec­es­sary steps to avoid er­rors, which could be detri­men­tal to in­di­vid­ual bor­row­ers.”

At­tor­ney-Gen­eral Aiyaz Sayed-Khaiyum.

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