CTOS clarifies on certain aspects from legal judgement
KUCHING: CTOS Digital Bhd (CTOS) has clarified on certain aspects of the recent legal judgement against the company, confirming that the absence of an injunction that allows CTOS to continue operating, as well as the legality on formulating credit scores.
The team at RHB Investment Bank Bhd (RHB Research) reiterated CTOS’ indication that it had been advised by its counsel that there is a strong basis for an appeal.
It has since filed a Notice of Appeal to the Court of Appeal, and no material loss is anticipated.
“Management believes that it is in compliance with the Credit Reporting Agencies Act 2010 (CRA 2010) and due process was followed with regards to the validation and accuracy of data,” it said in its analysis yesterday.
It noted that such litigation cases were a normal course of business, and CTOS has fended off 12 different litigation cases in the past.
“We were made to understand that the court’s ruling in favour of the plaintiff was based on a defamation claim, rather than on the legality of providing valueadded services such as credit scoring.
“Also, there is no injunction stopping CTOS from continuing to sell its products under the purview of CRA 2010, which is currently the main concern among investors.”
Management guided further clarification was done with the Registrar Office of Credit Reporting Agencies (PPK) and Bank Negara Malaysia (BNM) to confirm that CTOS is allowed and licensed to provide credit-related products under CRA 2010.
The regulators have been supportive of the CRA’s solutions/ products over the years in complementing BNM and lenders (especially non-bank lenders) to enhance the entire credit system and minimise risks.
“This has been an industry-wide practice, not just in Malaysia but globally. Based on our channel checks with some financial institutions that subscribe to CTOS’ services – and also from CTOS’ own conversations with clients – the subscription to its services is unaffected.”
Meanwhile, AmInvestment Bank Bhd remained neutral on the litigation case as CTOS has strong grounds for appeal backed by business as usual; no earnings impact to the key accounts which make up 43 per cent of total FY23 revenue; and high chances in winning the case on sufficient evidence.
Recall, direct consumer segment accounted for nine per cent of total FY23 revenue and credit scoring product makes up 13 to 15 per cent of FY23 revenue.