A-G Hits Back At Banks
New law designed to help youths access credit system, he says
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.