Credit checks: Moneylenders can disclose borrower info to more parties after change to law
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The credit bureaus will then be able to provide information on an applicant’s creditworthiness and indebtedness.
PHOTO: BT FILE
SINGAPORE - Licensed moneylenders who want to run credit checks on loan applicants will be allowed to disclose details of the borrower to obtain the relevant information from third parties.
Amendments to the law were passed by Parliament on Nov 22 to allow licensed moneylenders to share borrower information with more third parties, such as a prescribed list of credit bureaus.
These credit bureaus will then be able to provide additional information on an applicant’s creditworthiness and indebtedness to help a moneylender decide whether to grant the person a loan.
Currently, the Moneylenders Act limits whom licensed moneylenders can share data with.
Senior Parliamentary Secretary for Law Rahayu Mahzam said in her speech that this has hampered comprehensive credit checks on borrowers.
Licensed moneylenders are not able to obtain credit reports from credit bureaus other than a designated bureau known as the Moneylenders Credit Bureau (MLCB), as they are not allowed to disclose the borrower’s identification number.
“This may enable over-borrowing by individuals who choose to withhold or inaccurately declare their credit information.”
The extent of the borrower information that can be shared will be limited to what is necessary, she said.
In the case of purchasing a credit report from a prescribed credit bureau, for example, the disclosure of the identification number of the loan applicant will be necessary.
Apart from credit bureaus, licensed moneylenders will also be allowed to share borrower information with third parties engaged to provide IT support or to recover debts.
Licensed moneylenders can also share borrower information with any prescribed person “for purposes related to the welfare and protection of applicants, borrowers and sureties”.
The amendments also let licensed moneylenders obtain records from public agencies to verify the accuracy of information submitted by loan applicants.
Mr Louis Ng (Nee Soon GRC) sought elaboration on who the prescribed persons related to the welfare and protection of borrowers are.
Ms Rahayu replied that the Ministry of Law (MinLaw) intends to begin with social service agencies that have been assisting borrowers in negotiating debt consolidation loans or restructuring plans with licensed moneylenders.
“The disclosure of loan information to such (agencies) is essential for effective negotiation and should ultimately benefit the borrower.”
She added that in deciding whether any person or organisation should be permitted access to the confidential information, MinLaw will, among other matters, consider the need for disclosure and the consequential benefits.
Ms Joan Pereira (Tanjong Pagar GRC) and Nominated MP Neil Parekh Nimil Rajnikant asked about the safeguards to ensure that borrowers’ information will be kept secure and confidential.
Ms Rahayu said the prescribed credit bureaus and other third parties are subject to obligations under the Personal Data Protection Act.
They must, for instance, protect the data in their possession by making reasonable security arrangements to prevent unauthorised access, use or disclosure.
“Their ability to do so is something we will consider carefully when deciding whether to prescribe particular credit bureaus to be able to receive borrower information.”
