Legal And Regulatory Issues in Credit Bureau Development
This presentation discusses the need for credit bureaus (CBs), their features and their regulation, focusing mainly on South Asia.
- Sets out the various contexts that make a law is necessary for CBs;
- Describes the history of the CB;
- Emphasizes the many disadvantages of state owned/run CBs;
- Details the importance of the public sector or central banks in the development of a credit reporting system;
- Sets a target for CBs in South Asia and stresses that they should be:
- Self-sustaining and profitable;
- Privately owned;
- Efficient and competitive;
- Able to facilitate data collection and exchange, etc.;
- Lists the following steps to an ideal credit system:
- Remove central bank as shareholder;
- Corporatize the CB;
- Publicize the role of CBs and build public confidence in them;
- Describes an enabling legal framework, suggesting its legal provisions, regulations that empower the Central Bank, its provisions for consumer protection, the need for flexibility, etc.;
- Uses the United States 'Fair Credit Reporting Act' to illustrate its points;
- Informs about consumer protection and the principles of fairness, privacy, accuracy and transparency;
- Discusses various points about the information provided by CBs.
It concludes by highlighting the importance of a clear legal and regulatory framework; publicity and trust, consumer-rights, appropriate dispute resolution and reasonable penalties for non-compliance in the orderly development of a credit reporting system.