Republic of the Philippines
Beginning May 2017, all financial institutions that have complied with CIC’s requirements for submission and access of basic credit data will be allowed to test the use of the Credit Information System (CIS) on a limited basis only until year-end. CIC will be providing this service to the compliant institutions to prime up the System in preparation for its grand launch in January 2018.
Addressing the members and officers of the Association of Bank Compliance Officers (ABCOMP) in Makati City, CIC President and CEO Jaime P. Garchitorena told the attendees that access to the CIC production database during the pilot phase offers “a level of competitive advantage for any bank that fully utilizes it. Now, for those that entered the System early, there’s no reason why they shouldn’t have that advantage over those who did not comply”.
Asked about the penalties for those institutions that would not be compliant to Republic Act No. 9510, Garchitorena said that the penalty structure is being reviewed. “I don’t want to do a naming and shaming campaign” he said but added, “We haven’t quite held back on that. We did send a report on the compliance of their (member) banks to BAP, CTB, RBAP, CCAP, and all lending institutions that are required to submit to us.”
Garchitorena was quick to advise that instead of focusing on the penalties that the CIC could impose on non-compliant financial institutions, those covered by the law should change one’s mind set and focus instead on the benefits of being compliant. The CIC President encouraged the audience to ask themselves what are the risks associated with not being able to access the CIC database. “What does that mean to your lending practice? What does that mean to your speed of lending? What does that mean to your business development goals?” he asked them.
The CIC Head offered a caveat that the accessed data must not be used yet for risk management. He noted that the entire data collection and quality testing is expected to extend until the end of 2017. But even with that caveat, Mr. Garchitorena explained that “the wealth of data you can already avail, subject to the consent of the data subject, and if you have your own internal modelling and risk development systems, your company will benefit significantly from this.”
In order to enable lending institutions to lend more, lend to more, and lend more safely, the vision of the CIC is to have as much credit data on as many Filipinos as possible. Lenders who have the borrowers’ authority to access their data, will be able to develop new lending practices that are based on objective facts rather than subjective opinions and will be beneficial to consumers and MSMEs.
In closing, the CIC President shared his parting thoughts. “Imagine having all the lending profiles of borrowers in the Philippines, received from microfinance to universal-commercial lenders, credit card companies, and utilities, and being able to use this to develop statistical, financial business models of payment behavior that will remove the probability of prejudicial lending practice, lower the need for collateral and improve rates. That’s definitely a wonderful thing.”