"Credit Bureau Bill 2016" - Second Reading Speech by Mr Ong Ye Kung, Minister for Education (Higher Education and Skills) and Second Minister for Defence, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of the Monetary Authority of Singapore on 7 November 2016
Madam Speaker, I beg to move, “That the Bill be now read a second time”.
2 The stability of our financial system lies in sound lending practices, so that financial institutions lend to individuals and corporates who are credit worthy and able to repay their loans over time. Credit bureaus serve the purpose of providing borrowers’ information to help financial institutions assess the credit worthiness of their potential clients. Also, the reliability of the banks’ credit rating systems is enhanced by the availability of more complete credit information.
3 With these objectives in mind, the Monetary Authority of Singapore (“MAS”) had in 2001 encouraged the industry to consider establishing a consumer credit bureau to facilitate comprehensive credit risk assessment of their customers. In 2002, the Association of Banks in Singapore (“ABS”), together with several private sector partners, set up Credit Bureau (Singapore) Pte Ltd (“CBS”), Singapore’s first consumer credit bureau. CBS was recognised by MAS and subjected to confidentiality undertakings to safeguard banking data. In 2009, MAS recognised a second credit bureau operated by DP Credit Bureau Pte Ltd. Both credit bureaus collate consumer credit information from MAS-regulated financial institutions such as banks, finance companies and credit card companies, and share the information with all members to facilitate their credit assessments and loan underwriting decisions. Today, the two credit bureaus hold the credit information of more than 5 million individuals, on more than 98% of all credit facilities offered to individuals.
4 As credit bureaus collect larger amounts of and more detailed borrower information, it would be prudent to subject them to closer supervision by MAS. The current regulatory regime is inadequate as it only allows MAS to recognise or to revoke the recognition of credit bureaus. MAS does not have any other powers to exercise effective supervision over the credit bureaus. Moving forward, the Credit Bureau Bill 2016 will enable MAS to license and supervise credit bureaus to fulfil two objectives. First, to help ensure that they take adequate measures to safeguard the confidentiality, security and integrity of sensitive borrower information. Second, to better ensure the credit bureaus operate soundly in a way that protects consumer interests.
5 The Bill has been modelled after similar regimes in other countries, such as Australia and the USA. MAS has also consulted extensively with the industry and the public over the last 18 months on the policy changes and the draft Bill. We received a total of 32 submissions, have studied the feedback received and incorporated it into the Bill where appropriate.
6 Madam Speaker, I will now go through the 3 key areas of the Bill.
(A) Ensure Sound Governance and Operations
7 First, the Bill will empower MAS to license credit bureaus and subject them to corporate governance and operational requirements.
8 To promote good corporate governance, only fit and proper persons can be appointed to senior management positions in a licensed credit bureau. In addition, MAS will have powers to approve controlling shareholdings as well as the appointment and removal of directors and chief executives of licensed credit bureaus.
9 Licensed credit bureaus are also required to meet operational standards, which are specified in the Bill and subsidiary legislations such as Regulations and Notices. These include having robust controls in credit reporting processes, accurate and complete credit data specifications, secure information technology systems, and sound business continuity management, amongst others. In addition, MAS will be empowered to inspect and investigate licensed credit bureaus and assume control of them should they come under distress.
(B) Safeguard Confidentiality, Security and Integrity of Customer Credit Information
10 Second, the Bill will empower MAS to require licensed credit bureaus and their approved members to safeguard the confidentiality, security and integrity of customer credit information. This will provide greater assurance that the credit data provided by licensed credit bureaus and used by approved members to process consumer credit applications, are accurate.
11 To achieve this, licensed credit bureaus and their approved members will be required to put in place adequate controls to safeguard against data loss and unauthorised access to data. To help ensure that the credit information is accurate and complete, the Bill will require approved members to submit accurate and complete data to the licensed credit bureau in a timely manner and at regular intervals. MAS will have powers to investigate and sanction approved members of licensed credit bureaus for credit reporting breaches.
12 There are existing requirements under the Banking Act to restrict disclosure of confidential customer information to credit bureaus and their members for purposes other than for credit assessment. These will continue to apply.
(C) Protect Consumer Interests
13 Third, the Bill requires licensed credit bureaus and their approved members to protect consumers’ rights to access, review and rectify the customer information held by the credit bureaus.
14 Licensed credit bureaus will be required to offer various channels for consumers to access their credit reports. This will facilitate easy access and review of credit records by consumers, provide them with a consolidated view of their credit positions and credit standing as viewed by their creditors and allow consumers to dispute any inaccurate or incomplete data. Where disputes are raised, the Bill requires licensed credit bureaus and their approved members to conduct prompt investigations and rectify the erroneous records in a timely manner.
15 The Bill further requires licensed credit bureaus to provide individual consumers with free copies of their credit reports, within 30 days of approval or rejection of any credit application. This will enhance the ability of consumers to review their credit records and help reduce instances of consumers being denied credit due to inaccurate credit data.
16 A sound, stable and fair credit reporting system supports prudent and sustainable consumer lending practices. The Credit Bureau Act will help strengthen the credit reporting industry and align our regulatory regime with international best practices while maintaining adequate safeguards for consumers.
17 Madam Speaker, I beg to move.