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The Fair Trading Commission, FTC, recently conducted a preliminary assessment of credit bureaus in response to consumer concerns about incomplete reports.
“We will be issuing the preliminary report for consultation early next week,” said FTC Executive Director David Miller, in response to queries from the Financial Gleaner.
The next phase of the report will focus on input from stakeholders.
Consumers applying for loans typically consent to the lending institution conducting background credit checks through the credit bureaus, which are regulated by the central bank. Commercial bank loans hover at $1.34 trillion, with consumer loans making up half, or $675 billion.
Miller explained that the assessment was primarily triggered by “customer complaints” related to “incomplete or inaccurate information” on credit reports, as well as the fact that most banks rely on the same bureau. The report also reviewed how the Credit Reporting Act impacts on competition.
Over the next three months, the FTC will engage with stakeholders, including credit bureaus, data providers, credit information users, and the Bank of Jamaica, according to the FTC’s quarterly newsletter released this month
Over the years, three credit bureaus have operated locally, namely EveryData Jamaica Limited, formerly Creditinfo Jamaica; CRIF Information Bureau; and Credit Information Services Limited. One bureau exited the market recently, Miller noted, but didn’t have the name of the closed bureau on hand.
Up to Thursday, all three bureaus remained on the central bank’s website as licensed operators.
“Complaints suggest that most banks are using one bureau,” said Miller, while noting that the other two bureaus lack access to information from several data providers.
The FTC’s initial assessment produced six recommendations, as outlined in the unpublished preliminary report. These include mandating data reciprocity, improving regulatory clarity and efficiency, strengthening consumer protections, fostering innovation and monitoring market dynamics, promoting financial inclusion, and enhancing data privacy and security.
A representative of one of the credit bureaus explained that customer complaints often revolve around whether loan facilities have been fully closed.
“The concerns typically involve whether these facilities have been paid off,” the person said, adding that the Credit Reporting Act allows two weeks for the bureau to contact the lending institution to address the issue.
However, the resolution process can extend beyond two weeks, as the law specifies the time to contact, but not the time to resolve the issue. Discussions are under way to amend the Credit Reporting Act to require a 14-day resolution for such matters, the credit bureau representative said.
“This can frustrate customers who are seeking loans,” the person said. “We must receive a response within 14 days, but resolution isn’t guaranteed within that timeframe. “
The FTC first announced plans to assess the credit bureau sector in July 2022.
The Credit Reporting Act of 2010 established the legal framework for credit bureaus in Jamaica, with the BOJ as the regulatory authority. In 2013, Creditinfo Jamaica Limited and CRIF NM Credit Assure Limited launched the first full-fledged credit bureaus, followed by Credit Information Services Limited in 2014.
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