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Credit Reporting Priorities in
APEC Economies
Consumer Credit Reporting World Conference
Tony Hadley
Experian
Creating an environment for comprehensive, full
file, private credit reporting in the APEC region
• Asia Pacific Economic Cooperation (APEC)
– Implementation of APEC privacy principles
– Activities of APEC’s e-commerce working group
– Activities of APEC’s micro-credit and credit reporting
initiativesinitiatives
• Research and capacity building through
identification of regulatory and market barriers
• Alliance Building through APCC, ABAC, Asia
Bankers Association, SEACEN, PECC
What is Asia Pacific Economic
Cooperation (APEC)?
• Multilateral organization of 21 countries working to increase trade and economic development
• Modeled on World Trade Organization Organization
• Participation through designated domestic agencies and APEC Business Advisory Council
Participating APEC Economies
Australia
Brunei Darussalam
Canada
Chile
Mexico
New Zealand
Papua New Guinea
Peru
PhilippinesPeople's Republic of China
Hong Kong
Indonesia
Japan
Republic of Korea
Malaysia
Philippines
Russia
Singapore
Taiwan
Thailand
United States
Viet Nam
APEC E-commerce Working Group
• Implement APEC Privacy Guidelines
• Focus on cross-border privacy rules
• Recognizes flexibility of regulatory regimes
– Data Protection Authority Models
– Existing regulatory regimes
– Self-regulation– Self-regulation
• Reliance on regional trustmark system
• Testbed includes Experian, Proctor & Gamble, IBM, Oracle, Microsoft and Hewlett Packard,
APEC Principles are conducive to
comprehensive, full-file, private credit reporting
• Preventing Harm
• Consumer Notice
• Data Use
• Collection limitation
• Data Security
• Data Integrity
• Access and
Correction
• Consumer Choice
• Onward Transfer
responsibility
• Enforcement/
Implementation
What drives the privacy and data
security debate in APEC economies?
• Consumer protection in the e-commerce space
• Data security
• Economic development• Economic development
– Growth of e-commerce
– Growth of consumer
economies
– Outsourcing partnerships
Practical consideration in implementing APEC
Privacy Principles
• Privacy is culturally based
– What is “sensitive” in one economy may not be sensitive in another…
• Age, gender, marital status, financial information …
• Data Security Standards are • Data Security Standards are International
– Domains of Data Security • Protect against anticipated threats
to the security or integrity of data• Protect against unauthorized access
or use of information• Influence suppliers, vendors and
customers
APEC Credit Reporting Initiative
• Focus on promoting uniformity of credit reporting systems within APEC through research, capacity building, and identification of market and regulatory barriers
• Comprehensive reporting: payment and account information, whether full-file or negative-only, is contributed by multiple sectors (banking, retail, utilities, etc.)
• Full-File reporting: positive account and payment • Full-File reporting: positive account and payment information and derogatory information such as delinquencies, collection, bankruptcies and liens.
• Private reporting: aggregation of data and value-added services
• Reporting standards: reporting formats; duties of bureaus, furnishers and users; andpermissible purposes of credit data
APEC Overview of Private Bureaus
• Developed Systems:
– Australia, Canada, Hong Kong, Japan, Korea, New Zealand, US
• Developing Systems:
– Chile, Mexico, Peru, Russia, Singapore, Taiwan, Thailand
• No System:
– Brunei Darussalam, China, Indonesia, Malaysia, Philippines, – Brunei Darussalam, China, Indonesia, Malaysia, Philippines,
Papua New Guinea, Vietnam
What drives the need for uniformity of
credit reporting in APEC?
• Institution Risk Assessment –Basel II
• Regional Growth and Cooperation
• Regional Mobility• Regional Mobility
• Need for Fraud and Anti-Money Laundering Solutions
• Financing SME activities
• Potential for emergence of consumer economies
Benefits of an efficient credit
reporting system
Comprehensive data and analytics leads to:
� Better lending decisions
� Increased private lending
� Fairer lending practices
� Efficient account management
� Fraud detection and prevention
Similarities of Effective Credit
Reporting Systems
• Maximize the value of cooperative databases
• Use of comprehensive data reporting
• Facilitate risk-based• Facilitate risk-basedpricing
• Recognize “secondary uses” of credit information
• Evolve to meet consumer expectations, societal demands and advances in technology
Similarities: Reliance on Voluntary Data
• Voluntary contributions by data furnishers
• Reciprocity agreements
• Data contributors • Data contributors across multiple industries
– Financial services
– Retailers
– Utilities
– Telecommunications
Practical Considerations
• Regulatory impediments
• Marketplace impedimentsimpediments
• Cultural impediments
Practical Considerations: Regulatory
Impediments
• Lack of resources to implement & enforce laws
• Creditor rights to enforce and take collateral
• Bankruptcy laws• Bankruptcy laws
• Consumer protection and privacy laws
• Case law
• Consumer education and financial literacy
Practical Considerations: Marketplace
Impediments
• The value of a cooperative database is not well known outside the US, UK and Canada.
• Is derogatory information sufficient?
• Absence of consumer • Absence of consumer economies in many APEC economies
– Much lending is still focused on commercial lending
– Lending to SME’s appears more important than to consumers
Practical Considerations: Cultural
Impediments
• Credit reporting systems reflect societal values about:
– Indebtedness
– Financial privacy and – Financial privacy and
information sharing
– Competition
– Economic development
and opportunity
– Future economic vitality
Conclusions
• There are many factors driving the data privacy and security debate in Asia and the Americas
• Privacy regimes vary widely across Asia Pacific and the Americas and emerging countries want to balance the various models against economic opportunity
• Privacy is culturally based, while data security is • Privacy is culturally based, while data security is based upon international standards
• The absence of data protection and credit reporting regulatory regimes in many countries increases business risk
