Sabrina N. Gordon, Business Reporter

Jamaica's bankers say they are anxious for the credit-reporting bill, first mooted 10 years ago and now before a joint select committee of Parliament, to be passed into law this legislative year.

But a Jamaica Bankers' Association (JBA) spokesman, Dave Garcia, is contending that some current provisions of the draft legislation are not workable - a point already made by the bankers to the parliamentarians.

The JBA submitted to the Ministry of Finance in 2001, its own draft to establish the legal framework for credit bureaus - independent agencies that compile data on the borrowing and payment habits of consumers.

It emerged at a seminar on the bill in Kingston last month, that while some of the concerns of the banking practitioners have been met with agreement for the necessary amendments to be made, others remain thorny issues.

There has been compromise on the issue relating to the location of databases. Data, it was agreed, should be stored locally, but with an open window for companies to apply and present a case for storage overseas to the supervising authority, which at this stage, is expected to be the Bank of Jamaica.

Outstanding matters

But long-outstanding matters still under debate include the ability of credit-information providers to respond to allegations of providing unreliable information, and which institutions should be designated credit-information providers.

There has been no resolution on avenues for redress once an entity is listed in the registry as having provided unreliable credit information.

Debate is still raging, too, over whether utility companies should be among the list of credit-information providers.

The current draft defines credit-information providers as entities licensed under existing laws governing banking, financial institutions, building societies, co-operative societies, securities dealers, insurance firms and hire-purchase companies, as well as a person who publishes information on suits and judgements for debt claims.

Among the bankers' concerns, which have met with positive responses from lawmakers, is the view that the law as conceived, could be used to stifle competition in the credit bureau service business.

"One of the early issues we made submission on was the question of competitiveness in the credit-bureau business," said Garcia, general counsel at National Commercial Bank Jamaica and attorney-at-law representing the JBA.

"The idea that someone could be refused a licence to provide services as a credit bureau if demand was being filled by existing players was something we thought undesirable," said Garcia.

He said consensus had been reached on this point, with the revised draft legislation to allow entry into the market based on one being able to meet the required licensing and regulatory requirements.

Another, and perhaps the biggest concern for the bankers, Garcia indicated, was the question of at what stage customers' consent would be required.

The legislation in its current form requires the credit-information providers to first obtain customer consent.

Similarly, for credit bureaus to release credit information, they, too, would have to seek the customer's consent.

"Our concern is that it means that it will take a longer time to access credit," said Garcia.

The bankers have offered a way around this.

According to Garcia, "A happy compromise is to require that the bureau can only release the information with the customer's consent, but we can have a free flow of information into the bureau."

With the counterproposal having been accepted in principle, amendments to the Banking Act and similar provision in the financial institutions and building societies acts are still to be made.

Aim of the JBA

According to the banking-industry spokesman, the aim of the JBA was to ensure easy access to credit that is properly priced.

At least one entity has already begun pumping money into the setting up of a credit bureau in Jamaica, Premier Credit Bureau Limited, which says it has invested US$4 million so far.

The credit-reporting regulations, 2008, require applicants for a credit-bureau licence to have no less than five million in capital, and to submit audited financial reports with management discussion dealing with issues, such as credit files and types databases, enabling technology and a business plan.

A licence fee of $25,000 will also be charged once the applicant satisfies other fit and proper requirements.

sabrina.gordon@gleanerjm.com