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Two Years For Credit Bureau To Start Work

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Bahamian credit bureau will take 18-24 months to become operational once supporting legislation is enacted, the Deputy Prime Minister said yesterday.

During his contribution to the House debate on the Credit Reporting Bill and accompanying regulations, K P Turnquest said: "This is an important piece of legislation aimed at strengthening the stability of the financial sector and supporting credit growth.

"It will place the Bahamas' financial infrastructure in a much better position, and hopefully encourage a restart of bank lending that is so important for our economic growth objectives, during which time consumers will have an opportunity to make further adjustments to their borrowing profiles that would enable them to successfully access the credit markets.

"The Central Bank would commence an appropriate consumer education and information campaign about the operations of the proposed credit bureau, their rights and obligations."

The commercial banking industry and other formal lenders are likely to welcome the Government's move to enact the long-awaited Credit Bureau legislation, which has been several years in the making.

The House debate comes just one day after Tim Rider, Royal Bank of Canada's (RBC) Caribbean senior vice-president of sales, identified the absence of a Credit Bureau as one example of inadequate market infrastructure that had resulted in the bank's "diminshed appetite" to lend to middle and lower income mortgage borrowers.

"The current mortgage lending infrastructure has substantially diminished RBC's appetite for mortgages to the average Bahamian, and forced our focus up-market to those borrowers who are more affluent and have proven ability to repay their debt," Mr Rider told the RoyalFidelity Economic Outlook conference.

"The mortgage lending infrastructure, and lending infrastructure in general in this country, needs to improve so that we can actually open the lending books."

Mr Rider said the absence of a a Credit Bureau made it nearly impossible for Bahamas-based lenders to truly understand the level of indebtedness of a potential client. "This means decisions are based on significantly imperfect and much more narrow information than we are used to having in Canada, the US and Europe," Mr Rider said.

"While I know it is on the legislative docket, an expedited focus would be highly recommended."

The Bahamas' Credit Reporting Project was launched by the Central Bank in 2010, in a bid to establish a national credit reporting system in the Bahamas, including a Credit Bureau. The Bill and regulations were issued for public consultation in September 2014 and have been further revised since then, before finally being brought up for debate and passage in Parliament yesterday.

"We are advised that, based on the operating experience of existing Credit Bureaus, a sustainable credit reporting service provider needs in excess of 250,000 credit inquiries per annum, otherwise the capital cost of entry is too high and the subsequent cost of individual credit reports prohibitively expensive," Mr Turnquest said.

"Given this, the IFC has recommended a 'Hub & Spoke' operations model for Credit Bureau implementation in the Bahamas, where an existing provider would leverage its systems to service operations for several countries."

Mr Turnquest added: "In this model, the information held by the Credit Bureau on the consumers of each jurisdiction would be stored in the the Credit Bureau's database, but on a segregated basis with access provided to authorised persons only.

"Additionally, the Credit Bureau operator would be required to establish a physical presence in each country for the purpose of providing service to customers."

Mr Turnquest said confidentiality provisions in the Banks and Trust Companies Regulation Act 2000, and the Data Protection Act 2003, currently impede the sharing of a borrower's information with third parties. "To overcome this issue, the Clearing Banks Association was invited to draft a consent clause to permit credit providers to obtain the credit reports of their customers from the Credit Bureau, which may be used by lenders throughout the credit reporting sector to obtain consumer consent," said the Deputy Prime Minister.

He added: "The Credit Bureau will capture both positive and negative data, which studies have shown provides lenders the ability to predict borrowers' future payment behaviour. Consumers will have the right to dispute information held by the Credit Bureau that they perceive to be inaccurate, incomplete or out of date in a timely and low cost manner.

"The Data Protection Commissioner has the responsibility for enforcing the provisions of that Act with respect to protecting the personal data of individuals, and it is proposed that the Data Protection Commissioner's powers and responsibilities be extended to protecting consumers rights with respect to disputed credit reporting information."

The Bill also allows consumers the right to know that their information is being shared with the Credit Bureau, and know who has requested a copy of their credit report. They can also receive a free credit report annually upon request from the Credit Bureau.

The Bill also prohibits the Credit Bureau from disseminating data subject information to third parties without the subject's consent, and provides for the establishment of a Credit Reporting Review Commission to review any action taken by the Bureau as it relates to its clients or underlying data subjects.

Comments

proudloudandfnm 1 year, 2 months ago

The day this comes online 90% of GB residents will wake having horrible credit....

Thru no fault of their own I might add....

The folks that make 250 a week (90% of the country?) will wake up to find they can't buy or rent anything.

Just sayin.....

I think our problem goes a lot deeper than a credit beaureau....

I think a credit beaureau will be a cursed blessing....

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realitycheck242 1 year, 2 months ago

While a credit Bereau is what we need in the Bahamas the reality of our situation is that We have become a consumerism society just like all western countries.The financial discipline it takes to avoid living like the proverbial Joneses family is very hard to attain because of the modern pressures to satisfy relationships, business partners and friends and family. The research that shows that 80% of Americans live from pay check to pay check is higher amongst Bahamians because our average salary in the Bahamas is much lower.and the loan portfolio of the commercial banks can bear witness to this fact. With a population of over 300,000 and a smaller banking population this country has a total loan portfolio (personal and Bussiness) in the thousands of accounts with billions owed to those institutions. . Satistics also show that most government employees have breached the 75% salary deduction threshold proving that we a "must have now" generation. The advancment in technology and the need to get the latest eg Iphones and in some cases one for each family member has greatly contributed to the joneses effect. Gone are the days when we only had to worry about a house phone, cooking on the rock oven in the back yard, and riding the horse and buggy. As society modernizes the joneses effect will only increase because no one is willing to live like those monks anymore. Those who do are ostracized and considered homeless or doing bad. The joneses effect is all about percieved status and only one percent of us have truly earned it.

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bogart 1 year, 2 months ago

Banks and lenders have been the leaders in advancing bigger and bigger homes to extract maximum profit. From the days when covensnts in exclusive subdivisions made it fifficult to be there then the 1500 sq ft minimum size homes again restricting Bahsmians the jones effect to be there. Banks are first approachdd by developers for financing and in return banks seek exclusives to finance these new homes and gain profits. The consumer here is different from the US consumer who are famillisrcwith 1040s, REITs, 401s a d hosts of butgeting info, consumer protections anti trust, anti competition rules and csevere penalties who prey on consumers. Here while advocates are seeking protections for the businesses there must also be protections for the consumers who in many cases get ripped off and lose. If you are going to have protections for businesses you must have protections for the consumers. $16 dollar fee to cash a $100 doĺlar chq??.usury??.....bankers making commissions and bonus for allegedly pushing unnececessary bank accounts ??...products?..

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Dawes 1 year, 2 months ago

These nasty banks forcing us to go to them and then having the gall to make a profit off of us. We make the decision whether to take out a loan or Mortgage. We decide the size of the house we want to live in. On the $16 fee for cashing a chq. that is only if you are not a customer. If you want the bank to use its resources for you become a customer who is therefore paying for these services. Otherwise make a payment on it.

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