Credit Bureau Bill

Order for Second Reading read.

7.24 pm

The Minister for Education (Higher Education and Skills) and Second Minister for Defence (Mr Ong Ye Kung): Mdm Speaker, on behalf of the Deputy Prime Minister and Minister in Charge of the Monetary Authority of Singapore, I beg to move, "That the Bill be now read a Second time".

The stability of our financial system lies in sound lending practices, so that financial institutions lend to individuals and corporates who are creditworthy and able to repay their loans over time. Credit bureaus serve the purpose of providing borrowers' information to help financial institutions assess the creditworthiness of their potential clients. Also, the reliability of the banks' credit rating systems is enhanced by the availability of more complete credit information.

With these objectives in mind, the Monetary Authority of Singapore (MAS) had in 2001 encouraged the industry to consider establishing a consumer credit bureau to facilitate comprehensive credit risk assessment of their customers. In 2002, the Association of Banks in Singapore (ABS), together with several private sector partners, set up the Credit Bureau (Singapore) Pte Ltd (CBS), Singapore's first consumer credit bureau.

CBS was recognised by MAS and subjected to confidentiality undertakings to safeguard banking data. In 2009, MAS recognised a second credit bureau operated by DP Credit Bureau Pte Ltd (DPCB). Both credit bureaus collate consumer credit information from MAS-regulated financial institutions, such as banks, finance companies and credit card companies, and share the information with all members to facilitate their credit assessments and loan underwriting decisions. Today, the two credit bureaus hold the credit information of more than five million individuals, on more than 98% of all credit facilities offered to individuals.

As credit bureaus collect larger amounts of and more detailed borrower information, it would be prudent to subject them to closer supervision by MAS. The current regulatory regime is inadequate as it only allows MAS to recognise or revoke the recognition of credit bureaus. MAS does not have any other powers to exercise effective supervision over credit bureaus. Moving forward, the Credit Bureau Bill 2016 will enable MAS to license and supervise credit bureaus to fulfil two objectives.

First, to help ensure that they take adequate measures to safeguard the confidentiality, security and integrity of sensitive borrower information. Second, to better ensure the credit bureaus operate soundly in a way that protects consumer interests.

The Bill has been modelled after similar regimes in other countries, such as Australia and the US. MAS has also consulted extensively with the industry and the public over the last 18 months on the policy changes and the draft Bill. We received a total of 32 submissions, have studied the feedback received and incorporated it into the Bill where appropriate.

Mdm Speaker, I will now go through the three key areas of the Bill.

First, the Bill will empower MAS to license credit bureaus and subject them to corporate governance and operational requirements. To promote good corporate governance, only fit and proper persons can be appointed to senior management positions in a licensed credit bureau. In addition, MAS will have powers to approve controlling shareholdings as well as the appointment and removal of directors and chief executives of licensed credit bureaus.

Licensed credit bureaus are also required to meet operational standards, which are specified in the Bill and subsidiary legislations, such as Regulations and Notices. These include having robust controls in credit reporting processes, accurate and complete credit data specifications, secure information technology systems, and sound business continuity management, amongst others. In addition, MAS will be empowered to inspect and investigate licensed credit bureaus and assume control of them, should they come under duress or distress.

Second, the Bill will empower MAS to require licensed credit bureaus and their approved members to safeguard the confidentiality, security and integrity of customer credit information. This will provide greater assurance that the credit data provided by licensed credit bureaus and used by approved members to process consumer credit applications are accurate.

To achieve this, licensed credit bureaus and their approved members will be required to put in place adequate controls to safeguard against data loss and unauthorised access to data. To help ensure that the credit information is accurate and complete, the Bill will require approved members to submit accurate and complete data to the licensed credit bureau in a timely manner and at regular intervals. MAS will have powers to investigate and sanction approved members of licensed credit bureaus for credit reporting breaches.

There are existing requirements under the Banking Act to restrict disclosure of confidential customer information to credit bureaus and their members for purposes other than for credit assessment. These will continue to apply.

Third, the Bill requires licensed credit bureaus and their approved members to protect consumers' rights to access, review and rectify the customer information held by the credit bureaus.

Licensed credit bureaus will be required to offer various channels for consumers to access their credit reports. This will facilitate easy access and review of credit records by customers, provide them with a consolidated view of their credit positions and credit standing as viewed by their creditors and allow consumers to dispute any inaccurate or incomplete data. Where disputes are raised, the Bill requires licensed credit bureaus and their approved members to conduct prompt investigations and rectify the erroneous records in a timely manner.

The Bill further requires licensed credit bureaus to provide individual consumers with free copies of their credit reports, within 30 days of approval or rejection of any credit application. This will enhance the ability of consumers to review their credit records and help reduce instances of consumers being denied credit due to inaccurate credit data.

A sound, stable and fair credit reporting system supports prudent and sustainable consumer lending practices. The Credit Bureau Act will help strengthen the credit reporting industry and align our regulatory regime with international best practices while maintaining adequate safeguards for consumers. Mdm Speaker, I beg to move.

Question proposed.

Mdm Speaker: Mr Saktiandi Supaat.

7.31 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mdm Speaker, the "buy now, pay later" concept is becoming increasingly prevalent in today's society. From education to buying a house and furnishing it, to travelling, it is almost a norm now to go cashless. With online purchasing and services offering consumers a flexible array of options, having a credit card to make payments safely online is almost a must. Not only are cashless or prepaid transactions more convenient, when used wisely, it can help one to save money. For example, instead of spending thousands a year on rental while trying to save up for a dream home, one can quickly own a home by taking out a loan and buying on credit. It also means that more money can be availed for investments.

However, with so many banks and financial institutions, and a large number of others from travel operators, furniture outlets and so on, offering loans and collecting customer credit information, it is important that a good database is built on each individual who seeks to use the "buy now, pay later" schemes. This will help these institutions and others offering delayed payment options to safeguard their interest. It is also a way for consumers to learn to be prudent in their spending and there are checks in place when a limit is hit. While most people are generally prudent with their expenses, there are some who are callous with their finances and they end up trying to consume more than they can chew. The result: legal summonses with a view to being made a bankrupt.

But as the data is being collected and collated, we need to ensure that the credit bureaus have safeguards in place to ensure that the individual's personal data are not being compromised. Data breaches are becoming more widespread, and hacking techniques are growing in sophistication. However, with the introduction of the Credit Bureau Bill, I note that MAS will be able to oversee credit bureaus' management of customer credit information, with the objective of safeguarding confidentiality, security and integrity of the information. This is a welcomed move that will give consumers the assurance that their data would be in safe hands.

I hope that MAS will pay close attention, especially to the security systems that licensed credit bureaus (LCBs) are using to manage customer information. And, from the experience of "insiders", these bureaus should also ensure that staff who have access to sensitive information are properly screened before they are employed and, even after employment, they are monitored to avoid the leaks that we see peppering the news in the US. It should be made mandatory that these institutions review and update their systems periodically in accordance with current trends and developments in technology. Where lapses are detected, MAS should impose fines to keep the bureaus on their toes.

I also note that the Bill will allow consumers the right to access, review and rectify credit records. One of the main reasons for poor financial management is the lack of access to comprehensive credit reports. We tend to spend more freely when no physical cash exchanges hands. Without keeping prudent records, one's spending can easily snowball and spiral out of control. In 2015, the Credit Bureau Singapore (CBS) reported that more than 101,493 credit card holders defaulted on their debt. Many of them would roll over the debts to the next month. Some would rack up such large debts that they would take out additional loans to pay off the debts, and it then turns into a vicious cycle.

So, what happened? Was there a time lag between the time someone credits a mischief with his multiple credit cards before the data is fed to a bureau monitoring system?

The CBS offers as a promotion, free credit reports to consumers who have a credit facility with its 30-member banks and financial institutions, from April this year. Credit reports are essential to good money management as they help to keep track of credit payment history compiled from different credit providers and, in turn, empowering consumers to manage their spending more responsibly. A comprehensive report will also enable credit providers to make wiser lending decisions. The lack of comprehensive credit details and poor judgement on the part of credit bureaus have often led to indebted people being allowed to fall into a bottomless pit of borrowing and owing credit.

I hope MAS will also closely scrutinise the people who are appointed to the board of these LCBs so that sensitive information does not fall into the hands of the wrong people. It is also important that the members of LCBs are not open to all and sundry, and we end up with compromising sensitive information to the wrong people.

Enabling consumers to access their credit report whenever they wish to, and to monitor and rectify credit information is a good move. With increasing incidences of identity theft, this is crucial in helping consumers exercise personal responsibility of their transaction records. The LCBs' credit monitoring system also sends email notifications when key changes are detected on the credit file. This means that the consumer can easily detect fraudulent attempts to take credit in his or her name.

On a related note, it is also important for LCBs to have a second authentication system to protect the data. A data leak is potentially damaging and embarrassing for all users of the system.

Finally, I would like to take the opportunity to remind all Singaporeans to be mindful of their spending habits. A credit monitoring system is useful, but one should not be over-reliant on it. There are blind spots as the system does not monitor loans from unlicensed credit bureaus, credit lenders, friends, relatives, colleagues and so forth. The "buy now, pay later" concept is not an excuse to live beyond one's means. When making the purchase, it is important to realistically evaluate how one is going to save in order to pay off the loans in the near future. Good planning skills and foresight are important to ensure that one does not eventually become enslaved by debt.

Furthermore, please take loans from legitimate credit bureaus. Illegal moneylenders may resort to violence and other extreme means to seek repayments and, as their interest rates are not being policed, they are free to set it above however high they wish it to be. With MAS handling the licensing of credit bureaus, this will hopefully help consumers identify the safe, legal credit bureaus for their financial needs. Madam, I support the Bill.

Mdm Speaker: Mr Murali Pillai.

7.38 pm

Mr Murali Pillai (Bukit Batok): Mdm Speaker, I rise to support the objectives behind the Bill. I take the opportunity to highlight and seek clarification on the following three areas of the Bill.

First, the Bill draws a distinction between members and approved members of an LCB. Under section 30(2) of the Bill, an LCB is only permitted to disclose customer information received from any of its members to an approved member. Section 29(1) and the First Schedule of the Bill contemplate that the following are deemed approved members of the LCB namely, banks, merchant banks, finance companies and credit card issuers. This corresponds to the categories of persons who are authorised to receive customer credit information from credit bureaus under the Third Schedule of the Banking Act. Under section 29(3) and (4) of the Bill, LCB members who are not deemed approved members have to apply to MAS through the LCB to be approved as approved members of the LCB.

Could the Minister please clarify the circumstances in which approvals will be provided? In this regard, I wish to specifically highlight that licensed moneylenders and other entities in the business of providing consumer credit, such as hire-purchase companies, pawnbrokers and other vendor credit companies, are not deemed as approved members under the Bill and, therefore, would not have access to customer credit information held by the LCBs without the customer's written consent.

On the other hand, there has been at least one incident in the past where MAS has approved a licensed moneylender on an ad hoc basis to have access to customer information provided by credit bureaus. Is it therefore contemplated that such entities are at liberty to be approved members of LCB? If so, what are MAS' considerations in considering such applications and deciding whether to grant approval to be an approved member of the LCB?

I further note that section 16 of the Bill contemplates that third parties may obtain credit reports with the written consent of the data subject. This will allow parties, such as prospective employers, clubs and associations and so on, to procure credit reports from applicants before considering them for admission. Indeed, I note that the Casino Regulatory Authority of Singapore (CRA) requires applicants for special employee licences under the Casino Control Act to allow the CRA access to the applicant's reports from the credit bureaus.

In many of these instances, the applicant would be providing his written consent out of necessity of the situation. He or she would not have any real control over the use of the confidential information provided by the LCB to the third parties. Even though, in theory, he may have some options under the Personal Data Protection Act (PDPA), these are not transactions between equals. For this reason, would the Minister please consider protecting the confidentiality of this information, along similar lines provided for in section 33 of the Bill dealing with the duty of the approved members protecting the confidentiality of customer information obtained from the LCB?

Second, I note that the Ministry of Law (MinLaw) has set up a Money Lenders Credit Bureau (MLCB) regime in March this year, involving all licensed moneylenders as contributing members of MLCB. MLCB is run by DP Information Group, which also operates one of the two LCBs. However, MLCB only contains customer credit information in respect of loans taken with licensed moneylenders while the LCB regime only deals with credit information from banks and other financial institutions.

I am concerned that with the separate credit bureau regimes for moneylenders on one hand, and banks and other financial institutions on the other hand, there would be no overall visibility of the credit assessment of an individual. Having two separate regimes would not serve the purpose of assessing the overall credit worthiness of borrowers and to help borrowers avoid borrowing beyond their means. There is also no reason why MLCB and their members should not be subject to the same duties and responsibilities as LCBs and their members relating to customer information and maintaining the security and integrity of data, as set out in Parts 3 and 6 of the Bill.

Even though as disclosed by the hon Minister in this House on 18 February 2014, bank lending accounts for about 98% of household credit granted by commercial entities, it does not make the objective of assessing credit worthiness of the remaining 2% and protecting the customer information of the same any less important, especially if you were to consider the number of the people involved.

In these circumstances, may I please ask the reasons for keeping the MLCB regime separate from LCB? I stress again that the issues of protecting customer information and maintaining the security and integrity of data must surely be as important for MLCB as it is for LCB.

Moving to my third point, I support the objectives of the Bill to protect customer interest by affording customers the right to access, review and rectify their credit records vis-à-vis the LCB and approved members. Sections 18 and 35 of the Bill allows the customer to request that the LCB and the approved member correct an error of omission in any data that has been processed by the LCB or is in the possession and control of the approved members. The LCB or approved member has then to conduct and complete an investigation to ascertain the integrity of the data and must correct the data unless it is satisfied on reasonable grounds that a correction should not be made. MAS further highlighted in its response to feedback from public consultation that LCBs and members should institute appropriate processes to verify the disputed data against relevant documentary information.

Having regard to the objectives of the Bill to protect customer interest in this area, it is noteworthy that the Bill is silent as to whether: (a) the customers have any recourse if the LCB or the approved member refuses to make a correction; and (b) the investigation findings of the LCB or approved member is available to the consumer and subject to review.

In Australia, sections 20(u) and 21(w) of the Australian Privacy Act requires a credit reporting body or credit provider that refuses a credit information correction request to, within a reasonable period, give the individual written notice that the correction has not been made and set out the reasons for not correcting the information and explain how the individual may complain about that decision.

Section 23B(4) of the Australian Privacy Act also provides for an escalation mechanism, where an individual dissatisfied with the decision may first complain to the credit reporting body or the credit provider itself and, thereafter, make a further complaint to an external dispute resolution provider, such as the credit ombudsman service or the information commissioner.

While the Bill does not contain similar provisions, I note that section 22 of the PDPA provides for correction of personal data, and section 28 provides for the Personal Data Protection Commissioner to review a refusal to correct data. I further note that the provisions of the Bill are in addition to the PDPA and the definition of "personal data" in the latter Act is broad enough to include data, as defined in this Bill.

In the circumstances, could the Minister please confirm that despite sections 18 and 35 of the Bill requiring the LCBs to investigate correction requests, consumers would not have access to such investigation findings and their only recourse against the LCB's refusal to correct the data is to apply to the Personal Data Protection Commissioner to review under section 28 of the PDPA.

To conclude, notwithstanding my concerns in the three areas, namely, the regulatory framework vis-à-vis licensed moneylenders, treatment of confidential information at the hands of third parties and dealing with data disputes, I agree that formal supervision of credit bureaus and their members is needed to safeguard consumer credit information. I support the Bill.

Mdm Speaker: Mr Louis Ng.

7.46 pm

Mr Louis Ng Kok Kwang (Nee Soon): Madam, this Bill is timely, both considering the shift in the global context and in our domestic landscape.

Globally, most large international markets have moved towards the regulation of credit bureaus. After the scare of the 2008 Financial Crisis, jurisdictions quickly shifted towards stricter controls to close the loopholes allowing for unethical practices by credit bureaus. We quickly learnt that these malpractices were a major factor contributing to the crisis, and that governments need to act fast to prevent future crises of this scale.

It is timely for Singapore to keep in line with international standards and practices, alongside countries like the US, Japan and Hong Kong, and for us to develop a compatible regulatory regime, especially as international financial markets become increasingly globalised. Domestically, we have also moved towards an era of stronger privacy laws. The PDPA was a game changer for Singapore, and I am eager that we continue this trend to strengthen consumer rights.

The rapidly evolving nature of this market also means that more and more data is being collected, much of it highly sensitive and private information, and much of it unbeknownst to consumers. In a recent report, it was worrying that nine out of 10 credit applicants have never seen their own credit reports, even as they apply for new loans or new credit cards. They were not even aware that free credit reports were available to them. To be honest, I did not know as well.

As more young borrowers want to gain access to credit, they should be empowered to keep track of what their credit information is saying about their financial health. I am encouraged that section 16 of this Bill addresses this head-on. In this light, I strongly agree with the move for MAS to enact formal supervision over credit bureaus, closely monitoring their activities and how they safeguard sensitive data belonging to consumers.

Madam, while I see the immediate benefits of this Bill, I hope to ask a few questions on whether or not it considers Singapore's credit rating industry in the long term.

Currently, as the Minister mentioned, there are only two credit bureaus, the Credit Bureau Singapore (CBS) and the DP Credit Bureau (DPCB), in Singapore, and it is only these two which will be licensed under the new regulations. Has MAS considered whether new entrants into this industry will benefit Singapore's economy and, if so, can the Minister share their plans to register new credit bureaus?

In addition, out of these two credit bureaus, it seems that only CBS currently has access to comprehensive data from lenders, as banks are only required to supply data to CBS and not DPCB. Can the Minister confirm this?

As we seem to have a virtual monopoly and unfair advantage in the industry, has MAS been monitoring what effect this has? Without a level-playing field for industry players, like every industry, there will be a lack of innovation. Especially in our rapidly evolving market, where new payment solutions are springing up, credit bureaus also need to be on their feet, seeking out new sources of data, adjusting their analytical tools and algorithms to ensure they provide a holistic view of a person's creditworthiness.

It would seem that a lack of competition will lead to a lack of incentives to innovate, resulting in an environment where credit bureaus are allowed to be complacent.

While Singapore progresses towards the regulation of credit bureaus, I believe that we also need more competition and incentives for innovation to encourage credit bureaus to deliver their service better. Madam, in some ways, credit bureaus deliver a public good, and credit ratings have enormous effects on all players in the economy. Thus, I applaud the Bill for recognising that the Government must do all it can to ensure that the good is delivered with public interest as a priority. Madam, I stand in support of this Bill.

Mdm Speaker: Ms K Thanaletchimi.

7.50 pm

Ms K Thanaletchimi (Nominated Member): Mdm Speaker, I rise in support of the Bill. I believe this Bill, which provides MAS the power to license and supervise credit bureaus that collect customer credit information from banks and other financial institutions, will promote and ensure sustenance of standards for accuracy, fairness and confidentiality of customer information. This can also protect customers against credit bureaus for negligent inclusion of inaccurate information, if any, in their credit reports.

Regulating credit bureaus to the standards of developed countries, such as the US and Australia, is, indeed, a timely move. I am heartened to note that MAS conducted public consultations and some of the feedback has been incorporated into the Bill. Subjecting credit bureaus to formal supervision and annual audits by MAS preserves the integrity of the data collected on customers to determine their creditworthiness to facilitate credit assessment and loan decision. This will also ensure no customers are being evaluated incorrectly on their credit assessment, resulting in adverse outcome for the customers and, in some cases, undue inconvenience, hardship and loss of confidence and reputation.

Madam, while the Bill provides for regulatory safeguards to preserve the interest of their customers, there are still areas of concerns and clarifications required to be addressed. They are the following.

First, under section 17(3b), that is, "Duty to provide access to data", Licensed Credit Bureaus (LCBs) are required to provide consumers with copies of the credit reports at no cost within 30 days, as specified by the Authority. Does this refer to a consumer's full credit history? Is there any timeframe involved similar to that of the PDPA requirement on organisations for LCBs to provide consumers' credit information data for the past one year, upon request?

Second, under section 34(1b), that is, "Duty to maintain security and integrity of data and for members to protect any data received from the LCB by making reasonable security arrangements", what is considered "reasonable"? This can be subjective and may lead to members' own interpretation. Is there any guideline or benchmark set for reasonableness?

Third, under section 56, that is, "Authority must cease to be in control of LCB's relevant business when the Authority is satisfied…" What is the recommended maximum timeframe for the Authority to assume control of the LCBs? Will there be closer monitoring of the affected LCBs that were assumed control of by the Authority? Will the public, that is, customers, be notified that the Authority has assumed control and the reasons for having done so? Will the customers' credit information and credit rating data held by the LCBs be protected and secured during this period? What assurance can the customers have on all these matters?

Fourth, are employers permitted to check on the job applicant's or employee's credit information from the LCB without the consent of the individual? Do employers fall under the MAS' "approved member list"? If so, are employers required to comply with the standards of safeguarding this information? What if the LCB has provided incorrect credit information of that individual which results in the individual not being able to secure the job or, for that matter, banks rejecting a customer's loan application? Can the affected individual or customer seek damages against the LCB for the harm done to his or her reputation and the loss of income as a result of inaccurate information provided?

A 2015 study released by the Federal Trade Commission found that 23% of customers identified inaccurate information in their credit reports. To what extent are such inaccuracies prevalent in Singapore's credit bureaus? Are customers able to receive a free copy of their credit report from the credit reporting bureaus once a year? This will make it easy for customers to identify and dispute inaccurate information. In the same vein, users of the information for credit, insurance or employment purposes must be responsible for safeguarding the customers' credit information.

Madam, I certainly hope that, for a start, LCBs be monitored for compliance and legislation be periodically reviewed to take stock if it has achieved the intended purpose of raising the standards of the LCBs to safeguard and preserve the confidentiality, security and integrity of the customer credit information, and that LCBs institute sound governance in their operations. With this, I strongly support the Bill.

Mdm Speaker: Mr Gan Thiam Poh.

7.56 pm

Mr Gan Thiam Poh (Ang Mo Kio): Mdm Speaker, I support the amendments to the Act. Let me declare that I am also an employee of a local bank.

The Act itself will enable MAS to regulate the consumer and corporate credit reporting business. The enhanced Act will afford greater confidentiality and security to customers in the protection of their credit information.

I have some concerns and suggestions for the consideration of the Minister.

Firstly, I would like to ask if more supervision can be applied to the format of the credit information collated by the LCBs. If the format is standardised, it will help ensure consistency and minimise confusion among the users. It would be a disservice to consumers and businesses if misunderstandings arise due to different presentations and layouts. While I understand that formats are usually not hardwired into legislation, credit reports are sensitive documents which can have an important impact on families and livelihoods. Hence, consistency and clarity are very important.

Secondly, will there be grading guidelines or standard credit rating models for businesses to use, if such information is available? If different credit rating bureaus use different models of assessments, the conclusions of their credit reports for the same client can be very different. Standardised models help to enhance transparency. Hence, I would like to seek clarification on this aspect.

Mdm Speaker, let me continue in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] I support MAS' decision to prescribe the process and turnaround time for updating credit records. It is important to set consistent guidelines on the update of the credit records, including improvement of financial situation or data rectifications, to ensure the clients can access the credit or loans they need in a timely manner.

Finally, I would like to suggest that credit information, in addition to credit from Singapore banks and financial institutions, should include the credit from the Integrated Resorts (IRs) and the licensed moneylenders. Although we have the Moneylenders Credit Bureau (MLCB) to which all licensed moneylenders provide information about their loans, it would be better for all loans and credits to be consolidated for a better overview of a client's financial situation.

I support this Bill.

Mdm Speaker: Minister Ong Ye Kung.

8.00 pm

Mr Ong Ye Kung: Mdm Speaker, I would like to thank all the Members who have stayed late and spoken on the Bill and their support for its introduction. On behalf of the Deputy Prime Minister and Minister in charge of MAS, let me now address their questions.

First, on data security. To better protect sensitive credit data is one of the key objectives of enacting or introducing this Bill. Mr Saktiandi asked if MAS can ensure institutions upgrade their data protection security systems. By formalising MAS' supervision of credit bureaus, the Bill will strengthen data security. LCBs and their approved members will now be subject to MAS' technology risk management notices and guidelines. They are required to do so now once the Bill becomes law.

These set out MAS' requirements and expectations on the IT controls to protect consumer data from unauthorised access or disclosure. One example is that we will require them to use an additional layer of access control through a two-factor authentication. With this new legislation, should there be any gaps in controls, MAS can take the supervisory and enforcement action to get the relevant entity to improve its data security. And this will have to be an ongoing process even after the Bill becomes law.

Further, membership of licensed credit bureaus will be tightly controlled and subject to MAS' approval. I actually was not quite aware of the case raised that a licensed moneylender had access to data. But the idea is that only entities that have a bona fide need for bank credit information and can safeguard the data security competently, such as banks, merchant banks, finance companies and credit card issuers regulated by MAS, may be admitted as approved members.

Hence, in response to Ms Thanaletchimi, employers who wish to screen their employees' credit records must seek their employees' consent to do so. They cannot just obtain those reports merely by becoming approved members of LCBs. To minimise the risk of data security lapses by the new applicants, MAS will assess any new applicant using the same stringent standards expected of regulated financial institutions. So, if licensed moneylenders apply, they will be subject to the regulations and standards expected of financial institutions. Some of these criteria will include robust internal controls on system access as well as security.

As Mr Murali Pillai pointed out, an individual may give consent for an LCB to share his credit records with a third party, such as his employer or a country club. In such cases, the individual will be protected under the PDPA which requires the third party, say, the employer, to comply with the requirements to prevent unauthorised access, collection, use and disclosure of the personal data. The safeguards in the Credit Bureau Bill are not applicable because MAS' regulatory ambit would not extend to such third parties. So, it is relying back on the PDPA.

The second area is on the need for timely, comprehensive and reliable data. Mr Saktiandi Supaat raised the concern that someone who racks up credit card bills is unable to pay and then takes out additional loans to pay them off and then snowballing the debt. And he wondered if there was a time lag between his near default and his next credit application. There is no significant time lag. Information at the credit bureaus is updated promptly, monthly.

The current rules allow an individual to take unsecured loans such as through credit card bills, up to 24 months of his monthly salary. And I think that is the issue, and that is why the individual can take a loan to pay off his previous credit card bills because he is allowed up to 24 months. We agree with Mr Saktiandi that we should tighten such practices. Hence, the quantum of unsecured loan will be progressively reduced to 18 months and 12 months in 2017 and 2018 respectively. But just for the record, I am not making an announcement. This has been announced before.

Mr Gan Thiam Poh and Mr Murali Pillai asked if data from the Integrated Resorts (IRs) and licensed moneylenders should also be included in the LCBSs. I thank them for this suggestion. The answer is yes, if the data is relevant. In terms of data comprehensiveness, the two existing consumer credit bureaus already capture information of more than 98% of all credit facilities offered to consumers. MAS and MinLaw are studying and will be announcing measures to allow for more comprehensive credit bureau data in due course. MAS will also explore with the Casino Regulatory Authority whether information on the type of credit offered by IRs is relevant to the licensed credit bureaus. This can be done independently. Once we have the Act, I think we are able to do so more readily.

I should clarify that the Bill does not apply to MLCB as it will still be regulated by MinLaw under the Moneylenders Act. This approach allows MinLaw to set requirements for members of MLCB that are more suitable for and in line with the existing regulations for moneylenders. And I think it is quite safe to say that MAS does not have some of the expertise to regulate moneylenders.

The Bill also requires LCBs and their approved members to maintain data accuracy and completeness and empowers MAS to take enforcement actions against errant LCBs and their approved members. MAS will also set more detailed expectations on the timeliness of reporting and data accuracy. So, in response to Ms Thanaletchimi, the average data error rates have been very low historically. Over the last five years, it is at less than 0.1% of total records.

There were also a few questions on credit reports. In response to Ms Thanaletchimi, I would like to highlight that the credit report on the borrower shows his comprehensive payment history over the past one year and any defaults over the past three years.

The Bill requires LCBs to seek MAS' approval before making changes to the credit report forms. This will enable MAS to promote consistent reporting formats by LCBs so as to reduce confusion to consumers and lenders, as suggested by Mr Gan Thiam Poh. Mr Gan Thiam Poh suggested standardising credit scoring models across all credit bureaus. But as suggested by Mr Louis Ng too, there should also be some competition and a variety of practices which will be conducive to encouraging innovation. So, we have to strike a balance here.

The credit bureaus each use their own proprietary credit scoring methodologies. To standardise them can unnecessarily stifle research and innovation in developing more accurate ways to predict default. Nonetheless, it is important that credit scoring models must be reliable, whichever model you want to use. To that end, MAS will supervise LCBs to check that they back test their models against historical data to ensure that the models are predictive and reliable. But we will not insist that the methodologies must be the same.

Mr Murali Pillai and Ms Thanaletchimi raised a number of consumer protection issues regarding dispute resolution and access to free credit reports. To better protect consumers, the Bill requires LCBs and their approved members to investigate and rectify data errors on a timely basis. MAS will set expectations on proper governance arrangements, including for dispute resolution and turnaround times for this. The Bill empowers MAS to conduct inspections and investigations and take appropriate enforcement actions against errant LCBs or their approved members.

Mr Murali Pillai also asked if consumers could rely on protection under PDPA to correct data errors. To overlapping requirements, PDPA will not apply since the Bill already provides the mechanism for consumers to resolve data errors.

On the issue of free credit reports, MAS also needs to strike a balance between protecting consumers and keeping operating costs manageable and the service viable and to prevent phishing expeditions and frivolous requests for data. So, to protect consumers' interest, the Bill will require LCBs to provide a free copy of a consumer's credit report within 30 days from the date of approval or rejection of a credit facility at the consumer's request. This will allow the consumer to dispute any data error or engage his lender on a credit decision.

The approach also minimises the risk of repeated frivolous requests by consumers for their credit reports. But if a consumer wishes to have a credit report outside of this free 30-day period, he can purchase them any time, at $6 a copy, which is not a huge cost barrier.

Mr Louis Ng suggested allowing more credit bureaus to operate to spur innovation in the market. MAS also has to strike a balance here between protecting competition against the risk of data fragmentation. The latter would lead to inefficiencies, because the lender would have to approach multiple credit bureaus for their credit reports in order to form a comprehensive view of a borrower's credit history across all lenders. Other markets of similar sizes, such as Hong Kong and Taiwan, have only one consumer credit bureau.

Mr Louis Ng also asked whether banks are required to contribute comprehensive data to CBS only and not to DP Credit. There is actually no such requirement at all. Banks are free to decide which LCBs they wish to be a member of. Whichever they join, they would contribute data to that credit bureau.

Next, on the governance of LCBs, Mr Saktiandi Supaat raised the need for proper personnel to be appointed to the boards of LCBs. We share this concern. MAS will require LCBs to assess prospective directors and chief executive officers for their fitness and propriety. These assessments will include the financial standing and integrity of the relevant individuals. If they are found to be not fit and proper, MAS may remove the directors and chief executive officers. In an extreme case, where the officers and employees of substantial shareholders of an LCB are found to be not fit and proper, MAS may revoke the licence of the credit bureau. When an LCB faces financial or operational distress, MAS can assume control of the credit bureau to ensure that its credit reporting business continues to operate smoothly.

Ms Thanaletchimi asked if such an assumption of control be subject to any time limit and whether the public will be notified. The objective of MAS assuming control is to restore stable credit reporting operations and avoid any disruption to consumers and businesses. It is difficult to estimate upfront how long this will take because it will depend on various factors, including the cost of the financial and operation requests. But please be reassured that it is not in the interest of MAS to assume control longer than necessary. Our priority is always to put the entity back on a firm footing to restore confidence in the operation of the credit reporting system. And MAS will make public any assumption of control of an LCB via a Government Gazette.

In conclusion, I am glad that many Members support the Credit Bureau Bill. I am confident that with the Bill, we will strengthen Singapore's credit reporting industry so that borrowers and lenders can better manage their finances and risks. But at the same time, MAS has introduced a range of measures over the past few years to promote prudent lending and borrowing behaviour. This covers diverse products, from property loans to motor vehicle loans and unsecured credit.

However, we are ultimately responsible for our own financial well-being. To better understand how we can manage our finances proactively and use credit responsibly, I encourage Singaporeans to tap on the wealth of information provided by MoneySENSE − a bit of advertisement here. With that, Madam, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Ong Ye Kung].

Bill considered in Committee; reported without amendment; read a Third time and passed.