The National Bank of Ukraine proposed to amend the law “On the organization of the formation and circulation of credit histories” and other laws of Ukraine regarding state regulation and the functioning of credit history bureaus (BKI), taking into account the key importance of these institutions for the consumer lending market. This was reported by the regulator's press service.
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According to the NBU, this step is aimed at strengthening mechanisms for protecting the rights of borrowers, improving the system for exchanging credit information, protecting personal data and increasing the level of responsible lending.
Providing for changes
- the ability of the borrower, in addition to accessing his history and appealing false information, to attach to the credit report information about his reluctance to enter into credit transactions to protect against possible fraudulent activities; the obligation of BKI to promptly correct erroneous data and ensure reliable data protection, maintain a credit history for 10 years and properly destroy it, a transparent mechanism for the borrower to apply; the obligation of the lender/new lender to obtain the consent of the borrower and provide it at the request of the BKI/NBU, store it for 10 years, inform the borrower about the name and address of the BKI, the basis and purpose of collecting and using the data; the powers of the NBU to adopt regulatory legal acts and recommendations, respond to identified violations in the process of considering borrowers’ applications, apply corrective measures and enforcement measures for violation of these standards, etc.
The National Bank added that updating the legislation is intended to establish fair rules of the game for all market participants to preserve the completeness, purity and reliability of data and ensure the targeted use of credit history solely for assessing creditworthiness, managing credit risk and verifying the client. For this purpose:
- the new lender will be required to update information in the credit history in the event of obtaining the right to claim under a credit transaction, which will ensure market participants have access to up-to-date data; It will be possible to cross-border data exchange between national and foreign bureaus, which will make it possible to receive information about clients’ debt to foreign creditors through the credit history bureau; the creditor/new creditor will be able to use the borrower's identification data solely to settle the overdue debt on the consumer loan of his debtor or if the person is a representative/heir/guarantor/property guarantor under such an agreement; the collection company will be able to receive such data only from the creditor/new creditor and use it solely to interact with the debtor of such creditor/new creditor or, if the person is a representative/heir/guarantor/property guarantor under such an agreement; it is envisaged to establish a fine from 3,000 to 6,000 tax-free minimum incomes of citizens for using credit history data for other purposes, which will be considered a violation of the requirements for ethical behavior; it is envisaged to introduce fines for failure to provide/untimely provision/provision of inaccurate information to the borrower, for failure to provide/untimely provision/provision of unreliable information to the NBU, for evasion of execution/untimely execution of a written clause, etc.
“Other important An aspect of the proposed changes is the improvement of regulation and supervision of the activities of BKI, in particular, the establishment of requirements for their ownership structure, managers and internal control system, which will ensure the appropriate level of institutional ability of BKI to provide modern and high-quality services,” the regulator added.