Nov 2010 Financial News

BOJ ready for credit bureau applications

Nov 12, 2010

Jamaica's central bank says it is ready to receive applications for the establishment of credit bureaux, now that the requisite laws and regulations have been passed.

"The legal framework is now in place and the Bank of Jamaica, which is the authority designated under that law to actually carry out the regulatory aspect, has to be prepared to accept applications for licensing entities out there in the private sector that wish to carry out this service, and they are encouraged to make their applications," said BOJ Governor Brian Wynter, responding to questions raised on the matter at his quarterly press briefing Wednesday.

"We were active in the bank here in preparing, and so we are in a position now to enter discussion with anybody who is interested so that we can guide the process."

Wynter said no applications had yet come in, but that the central bank expects "to get some", suggesting that there may be several interested investors.

"We will be ready," he said.

But only one company has so far gone public with its intentions. Another unknown investor was also said to be having talks with banks and financial houses from which the bureau would be collecting data to establish credit histories.

Premier Credit Bureau Limited, a company owned by Lennox McLeod, has been waiting in the wings for the promulgation of the legislation since 2009, and building out its operation in preparation for the passage of the law.

McLeod could not be reached for comment up to press time. However, in earlier interviews, he said he was pouring some US$4 million into setting up his operation in Kingston.

The credit-reporting regulation was passed in September, with the act approved by Parliament a month earlier in August.

Applicants to the BOJ will be required to pay a fee of J$25,000, coupled with a licence fee of J$50,000 plus $100 for every 1,000 consumer credit enquiries - taking maximum fee payable under the act toJ$5 million.

The applicant must be a registered company with memorandum of association, articles of association and certificate of incorporation.

Basic requirements

Companies will be required to have a capital base of US$1,000 and maintain liability insurance coverage within limits to be set out by the supervising authority.

The applicant should also produce audited financial statements going back three years, or, in the case of a new company, audited opening balance sheet and audited financial statements for each year in operation.

"I understood sometime ago from experts that setting up such a bureau is not going to be easy; it will take some time to meet fit and proper standard, to ensure the integrity of the system, and so forth," said Wynter.

"But any entity that wants to set up one of these bureaux would have had discussions with data providers, would have developed pricing models and quite a bit of other things to be done on the commercial side ... but I don't expect any long delay in interested parties coming forward with concrete, specific proposals and applications," the BOJ governor said.

Under the act, data providers include banks, building societies, securities dealers, insurance companies, National Housing Trust, Students' Loan Bureau, persons in the business of selling goods under the Hire Purchase Act, among others.

Information obtained by the credit bureau concerning the financial history of a consumer that relates to his/her credit-worthiness is then required to be stored in a secure manner, to be determined by BOJ.

However, to obtain the consumer's information, the credit bureau must have the written consent of the consumer.


Source:
Sabrina Gordon, Staff Reporter
sabrina.gordon@gleanerjm.com
Jamaica Gleaner
Friday November 12, 2010

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