A second company has thrown its hat into the ring in applying to the Bank of Jamaica (BOJ) and the Ministry of Finance to establish a credit bureau in Jamaica.

Creditinfo Jamaica said it plans to submit an application within two weeks, and will join Premier Credit on a growing list of applicants to the regulators, which made the announcement that it was open to applications last week.

Damion Franklin, one of the principals representing Creditinfo Jamaica yesterday described the application process as ‘exhaustive’. He said the BOJ has informed applicants that the process which includes a ‘fit and proper’ test and other extensive disclosure, will also see the Forensic Investigations Division (FID) of the Jamaica Constabulary Force conduct ‘extensive background checks’ on all applicants.

In addition to the application form which requires data on the applicant company, qualifications, capabilities and financial information, applicants will also complete a 23 page personal questionnaire which asks for additional documentation and disclosure. The supporting statements include the documents of incorporation, the résumés and completed Fit and Proper questionnaires for each individual manager, director, and shareholder with ten percent or more of the shareholding; the business plan and feasibility study, with details of sources of funding; the most recent audited reports and requisite financial statements; and all other manuals, procedural or policy documents required. There is also a $25,000 fee for the initial licensing, $50,000 plus $100 for every 1000 credit inquiries up to a maximum of $5 million for renewing a licence, and a capital requirement of US$100,000 to start up. Licensees are also required to maintain insurance, at a limit to be set by the BOJ.

All the information supplied by applicant companies will be verified by the FID. As such, a time frame within which the applications would be approved or rejected has not yet been finalised.

However, Franklin believes this the final step in the establishment of credit bureaus in Jamaica has progressed very quickly.

A Credit Reporting Bill was tabled in Parliament in July 2008 to legally establish a credit reporting system in Jamaica which is designed to improve credit assessment processes, and facilitate enhanced risk management and loan pricing strategies throughout the financial sector. The Credit Reporting Act was passed by Parliament in August 2010 and The Credit Reporting Regulations which operationalise the Act, and specifies matters pertaining to the licensing process were approved by Parliament on January 14 this year and subsequently gazetted. The BOJ on February 8 this year welcomed applications for the service.

Persons offering credit reporting services are subject to licensing and oversight by the BOJ, which is the regulator. Prescribed reporting processes are outlined to ensure the objective and standardised reporting of credit information. The establishment of multiple credit bureaus and the licensing is also at the discretion of the BOJ and it is expected that the Central Bank will limit the number of licenses offered this year.

Given the requirements for the operation of a licensed bureau, Franklin believes that the members of the financial system will respond favourably to those operators who have been licensed and under the regulation of the BOJ.

“I think the banks have enough faith in the BOJ so that if the BOJ licenses a credit bureau they will trust them,” Franklin noted.

A credit bureau system will allow banks to better understand their customers in order to price their loans to reflect the risk of the individual. This should have the effect of differential interest rates reflecting the credit ratings of a loan applicant.

Consumer’s will also know how they are rated and will be able to monitor the information held about them and take the appropriate steps to improve their ratings where necessary. Also, consumers will now be able to get a snapshot of all the various lines of credit they may have in one place. Additionally, if a lender is going to share information on a client with the credit bureau they must inform the client that they are going to do so and the client must agree to the information being shared.

Further information on the Credit Reporting Act, the Credit Reporting Regulations and the Application form and process are available on the BOJ website at www.boj.org.jm/supervised_cb_overview.php