Consumer credit-monitoring of spending likely under new act

Not only could your complete financial background soon be monitored by creditors, but under new regulations, they may also be monitoring your spending habits.

Thai authorities are considering brushing up the Credit Bureau Act in order to encourage efficiency in credit approvals, which they hope will help reduce nonperforming loans (NPLs) in the system.

Commercial banks and other members of the National Credit Bureau (NCB) can now check only the amount of approved credit held by a potential debtor and the debtors' repayment behaviour.

If the law is amended, all debtors' financial information, extended from the details allowed now, would be kept by the NCB.

This is part of the Bank of Thailand (BOT)'s fiveyear financial master plan phrase II which aims to reduce costs for financial institutions.

For example, if any debtor has bounced a cheque, that would be filed with the credit bureau. When any creditor checks the file, how many times the debtor had issued bounced cheques would be revealed.

The lifestyle of debtors  which reflects their spending  would also be shared among NCB members. With more information on debtors, creditors would be able to more efficiently analyse the ability to make the repayments.

The more a debtor spends, the less access he or she would get to new credit.

Oros Phetchareon, the BOT's division executive at the Legal and Litigation Department, said the data of guarantors and collateral would also be submitted to the NCB. This would enable creditors to know in detail the debtors' ability to repay debts.

In addition, the debtors' information would possibly be shared amongst other organisations such as factoring companies, savings cooperatives and insurance and life insurance companies.

At this stage only financial institutions, leasing companies and nonbank credit companies are members of the NCB.

"We must consider whether the efficiency of the system would be improved if we increase the number of eligible members," said Oros.

Earlier, some mobilephone companies wanted to become NCB members as they wanted to know if new subscribers could pay their bills. However, their requests were rejected as the authority considered it would have too great an impact.

Moreover, any debtors that were losing their debtrepayment ability could possibly have increasing concerns if the NCB was authorised to send a warning about their financial status to other creditors.

This is the practice in some other countries where the credit bureau informs its members that some debtors are losing their debtrepayment ability.

The authority will also consider revising individual information protection, which could be different from business information protection as businesses can potentially cause more damage than individuals.

The period of information collection remains unchanged. When debtors complete their repayments, their information would be retained by the NCB for three years.