Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC at the Second Reading of the Credit Bureau Bill [Bill No. 27/2016]
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 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 Personal Data Protection Act was a game-changer for Singapore. And I am eager that we continue this trend to strengthen consumer rights.
Keeping track of your credit report
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 9 out of 10 credit applicants have never seen their own credit report, 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 didn’t know as well.
As more young borrowers want to gain access to credit, they should also be empowered to keep track of what their credit information is saying about their financial health. I am encouraged that Section 16 of the Bill addresses this problem head-on.
Monitoring credit bureaus
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 the bill, I hope to ask a few questions on whether or not it considers Singapore’s credit rating industry in the long term.
Why only two credit bureaus?
Currently, there are only two credit bureaus (Credit Bureau Singapore and DP Credit Bureau) 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 Bill address that?
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 credit-worthiness.
It would seems 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 this Bill for recognising that the government must do all it can to ensure that this good is delivered with public interest as a priority.
Madam, I stand in support of this Bill.