The Credit Bureau Singapore (CBS) is a private company owned by the Association of Banks in Singapore (ABS) and DBIC Holdings, which is a unit of information management company Dun & Bradstreet.[1] The CBS was launched on 15 November 2002[2] as a financial risk management tool for banks. Founding members of the bureau include Citibank, United Overseas Bank (UOB), Development Bank of Singapore (DBS), Oversea-Chinese Banking Corporation (OCBC), American Express, ANZ, Maybank, HSBC and Standard Chartered Bank.[3]
The CBS helps financial institutions and credit card companies to assess the risks of extending credit to a potential or existing client by providing them with a credit report of the borrower.[4] The credit report includes information such as the borrower’s credit history, credit repayment trend and, if any, records of defaults, litigation and bankruptcy. The report is generated from information provided by participating financial institutions and other publicly available sources such as court writ of summons and bankruptcy data.[5]
The move towards such a credit bureau helped to streamline and improve the way financial institutions assess loan applications. Prior to the establishment of the CBS, banks in Singapore used their own method of assessing the credit risk of borrowers that was based on factors such as the borrower’s income and credit information that was informally shared between banks. However, by taking factors other than income into consideration, financial institutions can now obtain a more accurate picture of a borrower’s credit history.[6]
The creation of a centralised repository of credit information for financial institutions also meant that credit assessment processes could be speeded up and operated at lower costs.[7] The credit bureau helped financial institutions to reduce their risk of loan defaults and delinquency rates. It also enabled the financial institutions to create a wider range of credit products at more competitive pricing for customers of different credit standings.[8]
The CBS abides by a strict code of conduct in order to safeguard the information of consumers from potential abuses.[9] For instance, the information in the bureau can only be accessed by participating financial institutions.[10] Moreover, members of the bureau can only use the information for the purpose of evaluating the creditworthiness of borrowers, and are prohibited under the Banking Act from disclosing the information to any other person.[11] The CBS is also not allowed to collect information such as addresses and contact numbers, credit limits, salary details and net worth of borrowers.[12]
Other than the participating institutions, consumers can also access their own credit report through the CBS. This arrangement was put in place so that consumers are aware of their credit repayment capability and hence able to make more informed choices regarding their loan or credit card applications. In addition, consumers can report any errors or discrepancies in their credit history to the CBS.[13]
The establishment of the CBS was the culmination of nearly two decades of discussion between the Monetary Authority of Singapore (MAS) and financial institutions in Singapore.[14] The idea of establishing a credit information bureau in Singapore was first proposed by the Monetary Authority of Singapore (MAS) in 1977. However, the proposed bureau failed to materialise then because the banks were reluctant to share the credit information of their customers, and borrowers were unhappy over the potential loss of financial privacy.[15] The banks were also concerned that the shared information could be misused for marketing purposes.[16]
References
1. Chan, C. P. (2002, November 16). Singapore’s first credit bureau launched. Today, p. 10. Retrieved from NewspaperSG.
2. First consumer credit bureau launched. (2002, November 16). The Straits Times, p. 30. Retrieved from NewspaperSG.
3. Credit Bureau (Singapore). Members of CBS. Retrieved November 15, 2013, from CBS website: http://www.creditbureau.com.sg/memberscbs.html
4. Chow, H. (2002, February 1). Credit bureau will reduce risks and lead to more loans. The Straits Times, p. 12. Retrieved from NewspaperSG.
5. The nuts and bolts of a credit report. (2004, October 14). The Straits Times, p. 23. Retrieved from NewspaperSG.
6. The Straits Times, 1 Feb 2002, p. 12.
7. The Straits Times, 1 Feb 2002, p. 12.
8. Monetary Authority of Singapore. (2003). Annual report 2002/2003 (p. 38). Singapore: The Authority. Call no.: RCLOS 332.495957 MASAR-[AR].
9. Monetary Authority of Singapore, 2003, p. 38.
10. Ong-Ang, A. B. (2002, June 12). Credit bureau to go by strict code of conduct. The Straits Times, p. 16. Retrieved from NewspaperSG.
11. The Straits Times, 12 Jun 2002, p. 16.
12. Today, 16 Nov 2002, p. 10.
13. The Consumer Credit Bureau: How it affects you. (2006, May 16). Today, pp. 30–31. Retrieved from NewspaperSG.
14. Low, I. (2002, January 19). ‘Launch in Q3’ for planned credit bureau. The Straits Times, p. S20; Credit bureau a step nearer to reality. (1981, October 2). The Straits Times, Times Business, p. 19; Majority not in favour of credit info bureau. (1982, May 2). The Straits Times, p. 13; Raj, C. (1987, April 16). MAS to set up Credit Information Bureau. The Straits Times, p. 23; Soh, D. (1987, September 12). MAS to decide on credit bureau’s fate. The Straits Times, p. 21; Raj, C. (1988, March 5). Banks say ‘no’ to credit information bureau. The Straits Times, p. 19. Retrieved NewspaperSG.
15. Credit information bureau proposed in 1977. (1984, December 9). The Sunday Times, p. 2. Retrieved from NewspaperSG.
16. The Straits Times, 9 Jan 2002, p. 20.
The information in this article is valid as at 2014 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.