Monday, 2 June 2014

Credit Bureau to be regulated soon


The Bank of Namibia (BoN) announced on 29 August 2013 that the proposed draft regulations to regulate credit bureaus in Namibia are now open for public consultation. The BoN states “There has been recent speculation in the media around whether or not credit bureaus are illegal in Namibia. The Bank of Namibia’s view is that the existing credit bureaus in Namibia are legal entities registered in accordance with the relevant laws by the Ministry of Trade and Industry.
That means they are not illegal. What is missing in our legal system at the moment is a specific law regulating how these entities should manage the information under their care, and there is no centralized credit information system that allows banks and other lenders to know the total exposure per client and their credit history so as to avoid overextending of consumers.”

What is a credit bureau?

A credit bureau (sometimes called consumer reporting agency or credit reference agency) is a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. Credit information such as a person’s previous payment of loans or accounts is a powerful tool to predict their future behavior. Through the collection of such information lenders such as banks and micro-lenders can assess credit worthiness, the client’s ability to pay back a loan. This information can also affect the interest rate and other conditions of a loan.

Present situation in Namibia

Currently Namibian credit providers are under no obligations to supply information to credit bureaus. It is against that background that the proposed regulations will seeks to establish rights and obligations of credit bureaus to be registered and licensed by the Bank of Namibia. It is also proposed by the BoN that all credit bureaus are to have a centralized system. Such a system should have the capability of calculating total credit exposure per client, and requires that all credit providers are to supply information to all credit bureaus. The Regulations also provide clear guidelines pertaining to the kind of data to be collected, the period of time information can be kept (retention period) etc.

Who are credit providers?

The Bank of Namibia has also defined who the sources of credit and non-credit information that are obliged to provide information to all credit bureaus that meet the qualifying criteria as set out in the proposed Regulations.


Credit providers

  •          Commercial banks
  •          Micro lenders
  •          Retailers providing credit

Utilities

  •          Regional Electricity Distributors (REDs)
  •          Bulk water suppliers
  •          Telecommunication companies

An organ of State, court or judicial officer

Information on Debt Judgments, non-payment of Maintenance or debt owed to a government department[1]

The regulations further states For the purpose of building data bases for SMEs, a credit bureau may collect and receive non-credit information from suppliers whose participation in the credit information system may be voluntary and the following categories are listed.

Local Authorities

  •          Municipalities
  •          Town Councils
  •          Village Councils


Public Consultation Process

The Bank of Namibia is therefore inviting all stakeholders and most importantly the general public to present their input to the Bank of Namibia for consideration. The public members/stakeholders are advised to make written submissions on the entire Regulations by or before 26 September 2013.
Written submissions on the Regulations can be done on the Bank of Namibia website at www.bon.com.na, or if confidentiality is requested, comments can be emailed to ndangi.katoma@bon.com.na. Further queries pertaining to this can be directed Mr. Ndangi Katoma, Director: Strategic Communications & Financial Sector Development, telephone number 061-283 5114.

Milton Louw is a consumer activist that has been advocating the creation of a national credit bureau (with the necessary consumer protections) since 2006 in a submission to the Parliament of Namibia. He is the voluntary Director of the Namibia Consumer Protection Group and all opinions expressed in this article are his own.


[1] Description provided by the writer and not BoN

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