KUALA LUMPUR (March 20): The upcoming Consumer Credit Act (CCA), aimed to promote responsible practices among credit lending activities, does not address credit scoring services provided by credit reporting agencies (CRAs).

This is because CRAs are supervised under the Credit Reporting Agencies Act 2010, which is under the purview of the Finance Ministry, said Bank Negara Malaysia (BNM) Deputy Governor Datuk Jessica Chew.

The issue of whether CRAs can produce credit scores “is something that the court will decide”, Chew said, referring to an ongoing civil suit involving CTOS Digital Bhd's unit CTOS Data Systems Sdn Bhd (CDS) which touched on the matter.

Credit scores nonetheless “have a useful purpose” for both service providers and consumers, the deputy governor said, adding that this includes prompting individuals to take action in order to get better financial access.

Chew was responding to questions on whether the CCA will touch on the provision of credit scores at a press conference on the release of the central bank’s 2023 annual report.

“[The Consumer Credit Bill] is in the stages of review already, so we expect the bill to be brought to the Parliament this year. That is the target.

“The bill addresses consumer lending, especially those who are not under the purview of Bank Negara Malaysia and the Securities Commission. On credit reporting agencies like CTOS, they are not directly something that the Act will address, because CTOS is under the Credit Reporting Act, which is under the Ministry of Finance,” she said.

“The issue of whether CTOS can produce a credit score is something that the court will decide.

“It’s important to keep in mind that credit scores have a useful purpose. In other jurisdictions, retail stores can use it, property owners use it to assess whether or not somebody they want to rent or provide a credit line to is credit worthy,” Chew said.

“For the individuals, the information in credit score can help individuals to take actions to improve their own creditworthiness and get better financial access,” she added.

The CCA, which will cover activities like ‘buy now pay later’, money lending and pawnbroking, will be governed by the Consumer Credit Oversight Board Task Force.

The issue of aggregated credit scoring was put into the spotlight this month, after a CTOS unit lost a suit in the High Court for negligence and breach of fiduciary duty.

This was after the plaintiff, a businesswoman, alleged that CTOS included inaccurate information in giving her a low credit score that subsequently resulted in her being unable to obtain a car loan.

At the time, the judge said, “In the court’s view[,] there is no provision in the [CRA] empowering the defendant (CDS) to formulate a credit score or empowering the defendant to create its own criteria or percentage to formulate a credit score.” CTOS is appealing against the decision.