CONSUMER CREDIT BUREAU (Use of customers' personal financial data)

Assoc. Prof. Chin Tet Yung asked the Deputy Prime Minister and Minister for Finance what are the conditions imposed by the Monetary Authority of Singapore for the use of personal financial data of customers in the setting up and operation of the Consumer Credit Bureau by the Association of Banks in Singapore.

Mr Lee Hsien Loong: Mr Speaker, Sir, there has been an active public debate on the establishment of the credit bureau and, particularly, on confidentiality. Many Singaporeans are concerned that the credit bureau will lead to a dilution in confidentiality of banking information. They fear that commercial banks, with the help of the bureau, will have access to client's information about the state of his or her finances that they were not privy to before. These are reasonable concerns and deserve to be addressed squarely.

The Banking Act provides the legal framework on the use of customer information. This provision is found in paragraph 7 of Part II of the Sixth Schedule. Banks are only permitted to disclose credit-related information to the recognised credit bureau such as personal details, the type and number of credit facilities granted, repayment trends and bankruptcy records. Banks are not allowed to disclose deposit information. This includes any funds, safe deposit boxes or safe custody arrangements of a customer under management by a bank. This is an important distinction between credit-related information and deposit information. The credit bureau and other MAS approved institutions participating in the bureau will only have access to a customer's credit history. The purpose for such access is restricted to the assessment of credit-worthiness of customers, and further disclosure to any other person is prohibited.

Furthermore, a credit bureau that the banks want to use must demonstrate its ability to address financial privacy concerns competently, and to discharge its role effectively in providing accurate reports. MAS will only recognise and gazette the credit bureau when the concerns are adequately addressed, possibly in the form of a written code of conduct for the bureau.

Should a credit bureau fail to maintain the high standards expected of it, MAS will not hesitate to cancel its recognition of the bureau. Once this happens, it becomes illegal for banks to provide customer information to the credit bureau.

MAS recognises that the Consumer Credit Bureau has an important role to play in the financial industry. With the establishment of a credit bureau, members will have more information to anticipate potential bad debt situations before they occur. They will be able to better manage their overall level of bad debts. Studies have also shown that credit bureaus in other countries have enabled credit providers to differentiate between customers, and manage and price them accordingly.

Assoc. Prof. Chin Tet Yung (Sembawang): Sir, can the DPM assure all credit card members that the information that they have supplied to these agencies will not be disclosed without proper safeguards, such as their identity would not be disclosed? And if their credit worthiness is disclosed, their transaction record should not be disclosed, but rather whether they were in good credit or bad credit. In other words, whether or not they can afford to pay for their charges, but not the specifics of what and how they are spending, because many credit agencies have been selling such information, so that people can build shopping profiles and so on of credit card users.

Mr Lee Hsien Loong: Yes, Mr Speaker, Sir, the purpose of the credit bureau is not to sell information so that people can build your profile. It is to establish your borrowing track record, whether you are paying back on time, whether you have defaulted, or whether you are bankrupt. You have to provide the name because if you do not provide the name, you cannot start to retrieve data. But what is associated with that name is not your deposit information, it is not how much money you have, it is what accounts you have. It is only things like the number and type of credit facilities granted, the repayment trends, whether you are repaying, bankruptcy records, and whether you have ever gone bankrupt or not.

Assoc. Prof. Chin Tet Yung: But what about transaction records?

Mr Lee Hsien Loong: I do not believe that transaction records will be covered.