Consumers Association of Penang

Giving voice to the little people...since 1970

Legislate credit reference agencies

Once again we urge the government to legislate credit reference agencies (CRAs) - companies that provide credit information on individual borrowers. We had in December 1999 asked that CRAs be licensed, controlled and regulated.

One of the disadvantage of non-regulation is that non-financial institutions are using CRAs as a means to collect their payments and in the process jeopardize the individual’s loan application.

It was reported in a local paper that a man who defaulted on his golf club membership fees had this fact included in his credit report with Credit Tip-Off Service Sdn Bhd (CTOS), a CRA.

As a result he could not qualify for a personal bank loan.

Majlis Bandaraya Shah Alam (MBSA) has also threatened motorists that their names will be forwarded to CTOS if they do not pay up their compounds.

Both the golf club and MBSA are using CTOS to collect payments. People might just pay up even if they dispute the payments because they want to get their bank loans approved.

Thus there is need to legislate information that can be included in a credit report to those solely related to credit facilities. Non-credit transactions should not be included at all.

In other countries CRAs are legislated. For example, in the United Kingdom, CRAs have to be licensed under the Consumer Credit Act. The license can be revoked or refused if the CRA is not fit to have one. The CRA also has to be registered under the Data Protection Act. The Data Protection Act places obligations on those who record and use personal data. It also give rights to individuals by allowing them to find out information about themselves, challenge it if appropriate and claim compensation in certain circumstances.

Legislation on CRAs in Malaysia is long overdue. The rights and privacy of the individual must be protected and this is only possible if CRAs are regulated by law.