6 firms accepted as credit bureaus

March 15, 2016 at 16:39

The state-controlled CIC has accredited local firm Credit Information Bureau, Inc., Credit Bureau Singapore, South Africa’s Compuscan, Italy’s CRIF S.p.A., Dubai’s Dun & Bradstreet South Asia Middle East Ltd. and the United State’s TransUnion to become special accessing entities (SAEs) for the envisioned national credit information system. Republic Act No. 9510 or the Credit Information System Act provides for the establishment of a comprehensive and centralized credit information system. It requires banks, life insurance companies, credit card companies and other entities providing credit facilities to regularly submit basic credit data to the CIC.

The accredited companies will have access to the data and use them to create credit scores, reports and other products, which lending institutions would then use to evaluate the creditworthiness of individuals and businesses.

“Their operations, of course, are premised on the availability of the data, at least as far as their relationship with the CIC is concerned, and we envision that complete or substantial collection of data will happen later this year, probably closer to December 2016 or 2017. So, as far as their operations are concerned in relation to the CIC, then we are looking at that time frame,” Mr. Garchitorena said.

The accredited credit bureaus, however, may already start conducting promotional activities upon completing their registration with the Securities and Exchange Commission (SEC), Mr. Garchitorena added.

“The credit bureaus themselves have to undertake a very long — hopefully within a year — process of educating the public,” Mr. Garchitorena said. “The whole process for the next year, including the presence of the credit bureaus will be getting the market ready and we feel that starting June we should be able to bring accredited credit bureaus on board to join us in road show.”

The accredited SAEs will have free hand in developing products from information accessed through the national registry, aside from credit scores and reports, without seeking prior approval from the CIC, Mr. Garchitorena said.

“Certainly we will be bringing them all together in a loose form of association and we’ll be asking them to deliver to us a roadmap of products they want to roll out… But otherwise, they are free to develop products that they can derive from the credit report that they’ll be accessing from the CIC.”

The CIC will also allow the accredited bureaus to price their respective credit information products although the state corporation has suggested a price ranging form P120 to 150 for every credit report on an individual.

“Our selling price to them, as agreed by the Board of the CIC, is P55 for the basic credit report. Now what they do is put their value-added services on top of that and of course, charge a fee for that,” Mr. Garchitorena said.

When asked whether the CIC would accredit more credit bureaus, Mr. Garchitorena said: “Six actually is envisioned to be a little bit too many, some had given that opinion where six credit bureaus may not be an ideal number.”

“But the CIC has determined that because we appreciate this type of free market competition among credit bureaus — that within certain limits the number that we have accredited will be just enough to be able to spur competition as well as the development of new products that’s more appropriate to the Philippine market.”

The six credit bureaus would be able to provide services nationwide, given the “nice mix” of the accredited companies, Mr. Garchitorena noted. “They’re not all going to be in the city; I think a lot of them will be working outside the major city centers.”

Establishing the national credit information system would provide micro, small and medium enterprises (MSMEs) greater access to finance, Finance Assistant Secretary Ma. Teresa S. Habitan noted in the same briefing.

“Why is this important for [MSMEs]? It’s difficult to create credit history when you try to borrow from a big bank because they need to know who you are. They need to know you have a culture of paying your debts. And how do you establish that? You establish that by having your credit information available to all the possible lenders in the financial system.”

Meanwhile, International Finance Corp. Operations Officer Griselda Santos took note of ongoing efforts in the Philippines to encourage banks to accept “movable” collaterals aside from the traditional real estate properties.

“We are in the process of revisiting the law. The law governing movable collateral or chattel mortgage is a very age-old law, even if the Philippines was among the first to have it, it hasn’t kept up with the spirit of the law in terms of facilitating access to finance based on movable collateral,” Ms. Santos said.

Encouraging banks to accept movable collaterals would further allow MSMEs access to financing, an initiative adopted by the Asia-Pacific Economic Cooperation (APEC) under the Cebu Action Plan.

The Philippines, in collaboration with international organizations, launched the FIDN during its hosting of the APEC meeting in November last year. FIDN is a multi-sectoral network including the International Finance Corp., APEC Business Advisory Council, SME Finance Forum and Organization for Economic Cooperation and Development.