Reserve bank reminds public to honour debt obligations

The Reserve Bank of Fiji (RBF) has received information that some banking customers are interpreting the impending closure of the Data Bureau Limited due to the passing of the new Fair Reporting Credit Act, as allowing for dispensation on the payment of their existing loan obligations with licensed financial institutions.

In a statement the Reserve Bank of Fiji reminds the general banking public that their loan agreements are between them and the licensed financial institutions, not the Data Bureau Limited, so they are contractually bound to continue to honour these debt obligations.

RBF Governor Mr. Barry Whiteside said that the regulatory role that the Bank now needs to undertake under the Fair Reporting of Credit Act is in line with the Reserve Bank’s mandate of maintaining financial stability.

Part 2 of the Act places the following specific responsibilities with the Reserve Bank of Fiji:

• to register, license and regulate credit reporting agencies, credit information providers, and credit report recipients.
• to maintain proper standards of conduct and acceptable credit reporting practices.

Transitional arrangements have also been specified under part six of the Act for which the Reserve Bank will work closely with the relevant government agencies and private sector stakeholders, to ensure a smooth transition to the new legislative framework.

WHITESIDE: “The initiative of the reporting system which existed before the passing of the Act has to be acknowledged, in establishing a structured framework for the reporting of loan delinquencies, a key indicator of financial stability. However, due to the nature and confidentiality of information generally held with such credit data bureaus, it is important to have in place an effective legislative framework that will work without prejudice.”

The ‘Fair Reporting of Credit Act’ will not create problems in the credit sector as credit providing institutes will no longer have access to the credit history of customers from the Data Bureau.

In a press conference this afternoon, Minister for Industry, Trade and Tourism Hon. Faiyaz Koya made this statement saying that the information from the Data Bureau has proven to have errors and unverified information that needs to be independently scrutinized.

KOYA: “For more than a decade, ordinary Fijians have been suffering at the hands of, the only credit reporting agency in Fiji, the Data Bureau, which has not undertaken proper verification of the information provided to them nor has it put in place any credible system to correct their information.”

“Complaints from the consumers have gone unheard by the Bureau. The FijiFirst Government is taking this matter head on, to find a solution for ordinary Fijians. “

Minister Koya said the Fair Reporting of Credit Act will put in place a legislative structure that provides for transparent and accountable reporting of customer information for credit purposes.

KOYA: “The current credit reporting structure under the Data Bureau was self-regulated and had no transparent principles, lacked accountability, and most importantly lacked rules to protect the privacy of individuals. Furthermore, it has been noted that at times the information is incorrect, which has led to many Fijians not being able to access finances from lending institutions.”

The Data Bureau in a letter to the Hon. Attorney-General has welcomed the Fair Reporting of Credit Act.

KOYA: “Several users have highlighted that the explicit consent of the customers is missing and when consent is obtained it is done in a non-transparent manner and the customers are not informed of the implications of allowing the information to be uploaded on to Data Bureau. ”

“Consumer Council of Fiji has received a large number of systemic-related complaints from customers. These included not being aware of consent being given to credit providers in terms of the information being provided to Data Bureau. This was mainly because the consent to allow credit information to be published on the Data Bureau is being bundled up with other requirements that need customers to provide consent on.”

Furthermore, an additional of 47 complaints were registered with the Consumer Council of Fiji regarding the direct conduct of Data Bureau and all these complaints have been referred to the Data Bureau.

The concerns raised are varied and include:

• Listing of names without consumer’s knowledge
• Listing despite clearance of debts
• Unfairly penalizing customers
• Listing without consent
• Listing despite non-payment for damaged goods
• Wrongful Listing

Minister Koya said the Data Bureau had been invited by the Consumer Council of Fiji for consultations on numerous occasions, such as the World Consumer Rights Day and Seminar on Hire Purchase Agreements but these invitations were declined by the Data Bureau.

KOYA: “There have been concerns raised with regards to the lack of consultation on the Fair Reporting of Credit Act, however, there was no consultation with the general public at the inception of Data Bureau. The shareholders of Data Bureau need to consult the general public more than relying on their advisers.”

The minister said customers do not have recourse to an independent body that will address their complaints.

KOYA: “The current practice of the Data Bureau is that all complaints are referred to the General Manager of Data Bureau and if the customers are still unhappy, the complaints are referred to a Complaint Committee chaired by the General Manager and 2 paid members. Making theme the judge, jury and executioner.”

“This does not offer an independent mechanism to resolve customer disputes and it was a clear conflict of interest on the part of the Data Bureau, as the complaints were against the Data Bureau and they, through the General Manager, were an integral part of the complaints handling the process.”

Minister Koya said the only form of recourse that is available is through the Court system but it is too expensive and drawn out for the ordinary Fijian.

KOYA: “It is more concerning that the shareholders of the Data Bureau are also owners or shareholders or banks and financial institutions in Fiji. It is very interesting that the members of the Data Bureau claim that the concept was modeled on Credit Reporters concept of New Zealand. It is worth noting that the New Zealand Credit Reporters are bound by law, such as a mandatory Credit Reporting Privacy Code and other reporting requirements.”

In Fiji, if incorrect information was published a citizen could only sue the Data Bureau for any loss of reputation, which for Fijians is a difficult process to undertake.

KOYA: “Interestingly, the model (New Zealand) that the Data Bureau was supposedly following, allowed the customers the opportunity to report the incorrect information to the Consumer Reporter, and it is mandatory that the Credit Reporter corrects the information in 20 days.”

Minister Koya said this level of fairness was not accorded to Fijian consumers who needed credit.

KOYA: “Fijians need to understand that the introduction of the Fair Reporting of Credit Act allows for Credit Reporting Agencies to be formed provided that they meet the criteria set out in the Act and its Regulations.”

“The Act is not stopping credit reporting but regulates credit reporting so that it is done in a transparent manner.”

The Association of Banks in Fiji (ABIF) this morning expressed disappointment at the passage of the Fair Reporting of Credit Act through the Parliament yesterday.

READ: No more Data Bureau, consumer credit history to reset

ABIF Chairman, Kevin McCarthy said while the Bill “clears the slate” for many people, it also removed the good credit records of those vast majority of responsible borrowers.

MCCARTHY: “The inability now to be able to search a person’s credit history will greatly increase the risk levels within the personal lending market. Lenders will have little option but to increase interest rates to compensate for this increased risk.”

Mr McCarthy said borrowers in arrears had already contacted banks stating that if there was no Data Bureau, they see no need to pay back their loans.

MCCARTHY:  “Banks will have no option but to pursue legal action through to bankruptcy to enforce payment of these loans…Processing times for loan approvals will now increase as banks ask borrowers to provide evidence of having paid off loans in the past. “

Mr McCarthy said the Act passed with zero consultation with stakeholders including the Data Bureau, Commercial Banks, Finance Companies, Hire Purchase & credit providers and with what appears to be no consultation with the proposed regulator, Reserve Bank of Fiji.

Consumer Council: New law gives consumers a clean slate

The Consumer Council of Fiji welcomed the passing of the Fair Reporting of Credit Act, saying the law would give consumers whose names were listed on Data Bureau database “a clean slate with no credit history”.

Council CEO Mrs Premila Kumar said: “After years of lobbying, finally consumers have won.”

KUMAR: “It is a joyous moment for consumers to start afresh. This means now they can access loan or buy goods on credit without being subjected to embarrassment and inconvenience.”

Mrs Kumar said aggrieved consumers had been bullied and blackmailed by Data Bureau and its members for some time.

KUMAR: “The Council has been intensely lobbying Government over the years to regulate Data Bureau so that there is a systematic way of collecting, disseminating and use of consumers’ private financial information.”

Mrs Kumar said the Data Bureau had been operating unfairly, under disclaimers such as “You must be aware that the information on your credit report is supplied by third parties. Therefore, the Credit Bureau will not be held liable for its inaccuracy”, thus not taking responsibility for their errors.

KUMAR: “We have been receiving complaints and concerns from some very frustrated consumers who are unable to access loan or purchase goods on credit.  These consumers had raised their concerns that no financial institution was prepared to sanction their loan simply because their names appeared on the Data Bureau list.”

Since 2008 to date, the Council has received 47 complaints against Data Bureau. These claims against Data Bureau reflect “invasion of privacy, inaccurate information, listing of names for seven long years despite clearing the loan.”