A number of issues have arisen from the recent controversy involving CTOS.
The Bar Council has over the years received numerous complaints with regard to
CTOS and the manner in which it works as a “blacklisting” mechanism relied upon
by the banks. The complaint is that such data may not be current and that banks
rely on this information without further verification by them and without
informing their customers.
The Bar Council views this as wholly unacceptable as unverified credit status
reports are not reflective of the actual credit worthiness of a person or
business. We are informed that the reports even include information on
litigation matters that are still pending as well as information on invoices
that are merely pending payment.
The Bar Council has highlighted this problem to Bank Negara in the past and has
requested that Bank Negara issue directives to banks and financial institutions
not to rely on CTOS as a basis to reject loan applications and requiring them to
disclose the reason for the rejection of loan applications to a prospective
customer if it is based on the CTOS information.
The collection of personal information of this nature by an organisation relied
on by the Banks brings with it a heavy responsibility to ensure accuracy. A
burden however equally lies upon the Banks to verify the accuracy of information
that they rely on and to be transparent with their customers about this
information.
It is now timely to introduce the appropriate safeguards to protect such
information. Credit reference companies, such as CTOS, must be licensed,
controlled and regulated. They must also be made to assume liability for
inaccurate reporting that results in loss to any party. The Data Protection Bill
which protects private information and which was discussed some years ago must
be looked at again. Without a regulatory framework, there is a pervasive risk of
abuse. As can be seen from the numerous complaints, the information provided by
CTOS has caused injustice, hardship and inconvenience to consumers. The Bar
Council welcomes the recent directive by the Cabinet requiring banks to obtain
the consent of borrowers before acquiring information from companies that supply
credit information. This is a positive step towards establishing a regulatory
framework that will safeguard the interests of consumers.
Must also look at unfair contract terms written by Andrew Khoo Chin Hock,
Friday, July 13 2007 01:56 am
Banks will insert a standard clause in their letters of offer to say that intending borrowers must agree that credit checks are performed on them, and that they consent to the release by third parties of credit information held on intending borrowers. So intending borrowers will be back to square one. Thus in addition to the rights of data subjects under the long overdue Data Protection Bill, the government must legislate against instances where organisations such as banks, housing developers, etc. use their superior economic position to force unfair contract terms down the throats of the consumer. For example, banks making borrowers pay for the bank's legal fees. This should stop. The LPA has provisions to insist that both sides to a housing transaction between developer and purchaser must pay their own legal fees if 2 sets of solicitors are involved. It is high time we do the same with banking transactions. So many ordinary folks think that because they are paying the legal fees in a banking transaction the lawyer must be acting for them. We need to put across the need to protect consumers against this abuse of their economic position by the banks.
Andrew Khoo Chin Hock
Debt Collectors written by Mohamad Ezri Bin Abdul Wahab,
Friday, July 13 2007 11:01 am
First is CTOS, the second issue that should be raised is the existence of private Debt Collectors that is being said representing the financial institutions and various companies in collecting Debt.
Especially the debt collectors who are using Ah Long's style of collecting.
Like CTOS, the public is embarrass to come forward today about this issue as if addressed publicly the person concerned is afraid that it will diminish his stature in the eyes of the public and could effect further or worsen his well being and business that will cause him going deeper into financial problems.
I believe if the Bar address this issue, the public will respond.
If it is true, the debt collectors are also agencies that is not regulated and not scrutinize, at least most of them.
If the said agencies are really in existence and the financial institutions and companies are really engaging them, what will happen to the legal remedy and lawyers?
Mohamad Ezri Bin Abdul Wahab
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Banks will insert a standard clause in their letters of offer to say that intending borrowers must agree that credit checks are performed on them, and that they consent to the release by third parties of credit information held on intending borrowers. So intending borrowers will be back to square one. Thus in addition to the rights of data subjects under the long overdue Data Protection Bill, the government must legislate against instances where organisations such as banks, housing developers, etc. use their superior economic position to force unfair contract terms down the throats of the consumer. For example, banks making borrowers pay for the bank's legal fees. This should stop. The LPA has provisions to insist that both sides to a housing transaction between developer and purchaser must pay their own legal fees if 2 sets of solicitors are involved. It is high time we do the same with banking transactions. So many ordinary folks think that because they are paying the legal fees in a banking transaction the lawyer must be acting for them. We need to put across the need to protect consumers against this abuse of their economic position by the banks.
Andrew Khoo Chin Hock