Credit Reporting Agencies in Malaysia

The Credit Reporting Agencies Bill 2009 introduced and tabled at The Dewan Rakyat recently by Deputy Finance Minister Datuk Dr. Awang Adek Hussin is scheduled to be debated and passed during the current meeting of Parliament.

According to a report by New Straits Times, when it becomes law, private credit reference agencies such as Credit Tip Off Service Sdn Bhd (CTOS) will be controlled through registration and supervised by a registrar.

The bill will complement the Personal Data Protection Bill, which aims to protect and regulate the use of private data. The bill also seeks to ensure the credit reporting agencies and their officers will be responsible for compiling data and updating them. Often, this failure had resulted in many people, who had settled their debts or loans, remaining on the blacklist of banks.

However, credit agencies have to get written permission from customers when they require such information from the customer concerned for the first time through a notice. The notice should inform the customer to whom the information would be given to and if it is obligatory or voluntary for any of the information to be disclosed by the customer.

The agencies also cannot disclose information unless it has obtained permission from the customer. However, there is an exemption and information can be disclosed to prevent crime or when it is provided for under the law.

Credit Cards and the Malaysian Budget 2010

With effect from January 1, 2010, principal cardholders and supplementary cardholders of credit cards and charge cards will have to pay an annual service tax of RM50/- per card and RM25/= per card respectively. More and more people are using credit cards in Malaysia. The number of credit cards in circulation has increased from two million in 1997 to eleven million in August this year. This does not include 285,000 charge cards in use. Service tax of RM50/= was previously imposed with effect from January 1, 1997, and abolished on April 1, 2001. The latest service tax is to promote careful spending among Malaysians.

Credit card transactions growth dipped to 6 percent to RM38.9 billion in the first seven months of the year, compared with an 18.2 percent increase in the same period last year,

Individuals with credit card related debts seeking the services of the central bank’s Credit Counselling and Debt Management Agency increased by 38.6 percent to 7492 from a 75.9 percent growth to 5406 in the same seven-month period last year. These accounted for 74 percent of total cases under the Debt Management Programme.

For those people who are holding 5 or 6 cards, it means an extra expense of RM250/= to RM300/=.just to keep the cards. It is time for them to reduce their cards to not more than two. Too many cards mean too much temptation to overspend and too many cheques to issue to settle debts from too many banks.