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Consumer Protection With A Regulated Credit Reporting Agency

Consumer Protection With A  Regulated Credit Reporting Agency
Counting Dollars
April 20
10:00 2018

 

People have aspirations of earning their dream house or car, travelling to holiday destinations, embarking on ventures and being financially stable to support their day to day living.

Some consumers save up in order to afford these; however, many turn to other avenues such as commercial banks and credit institutions to provide them with loans to meet their needs.

Consumers who borrow money and buy goods on credit through hire purchase create a credit history. This serves as their repayment of debts record. This credit information is used by the lending institutions to determine the risk of lending money to a particular customer.

Over the years, the Consumer Council of Fiji has repeatedly called for a regulated credit reporting agency that was required to operate in accordance with laws and be held accountable for the information received or released by them.

The Council has welcomed the recent announcement by the Reserve Bank of Fiji, for granting the first credit reporting agency licence to the newly-established Credit Information Reporting Agency PTE Ltd (CIRA).

In accordance with the Fair Reporting of Credit Act 2016, the agency is mandated to operate in a transparent manner and ensure that accurate credit information of consumers are collated and maintained at all times.

This is beneficial to consumers as they would be motivated to maintain a positive credit reputation. Not to mention they could easily access loans without waiting for months for a decision from the lending institution in the absence of their credit history. Consumers would also be prevented from landing in unnecessary financial hardships as they would only be able to borrow within their repayment capability.

 

Consumers’ right to information is also upheld in Section 14 of the Act, which stipulates that:

“A person has the right to –

(a) receive a copy of the information concerning such person held by a credit reporting agency;

(b) require the credit information agency to correct the credit information referred to in paragraph (a); or

(c) challenge the accuracy of information referred to in paragraph (a).

Through this provision, consumers can hold Credit Reporting Agencies accountable and responsible unlike Data Bureau that worked under disclaimer shifting the responsibility to their paid members.

Consumers must also be aware that their written consent is required to allow lending institutions to submit their credit information to the licensed credit reporting agency.

As per the Fair Reporting of Credit Regulations 2016, the minimum amount of credit information that may be reported to the credit reporting agency is a payment of more than $300 that has been overdue for at least 60 days.

Credit reporting agencies that store and provide credit information less than the abovementioned is deemed to have committed an offence and is liable on conviction to pay a fine or face imprisonment.

The confidentiality of consumers’ credit information is also required to be maintained as anyone who obtains confidential data of a person without their consent will have to deal with legal actions.

Having a regulated credit reporting agency that protects consumers means that any complaint will be dealt with in a transparent and ethical manner by the agency.

The agency is required to produce an annual compliance report that includes the accuracy of credit information received and a summary of each complaint received and the time taken to solve it.

Financial institutions also benefit from a regulated credit reporting agency as this means they are able to minimize the time taken to conduct risk assessment of borrowers by using information provided by the Credit Reporting Agency. Credit reporting also increases a lenders ability to recognize non-defaulting borrowers with good credit history. This also means that new lending institutions could enter the loans market easily without having to spend large sums of money in establishing the credit worthiness of its clients.

The Council urges consumers to exercise due diligence when dealing with banks and credit institutions to ensure they are aware of their credit information use and consent to data being used by a credit reporting agency. They must seek appropriate advice from the financial institutions on how their information would be used by such institutions.

Consumers are advised to seek the Council’s assistance and/or lodge complaints through the National Consumer Helpline toll-free number 155 if they encounter any problems with their banks and/or Credit Information Reporting Agency PTE Ltd.

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