Nicosia, Cyprus. The House Finance Committee examined seven bills from the Finance Ministry aimed at creating a unified credit data exchange framework and introducing a credit scoring system for individuals and businesses.
Reform linked to Recovery and Resilience Plan
The legislative package is part of a broader reform to establish a digital system for data exchange and creditworthiness assessment, described as a prerequisite for the disbursement of the seventh tranche under the Recovery and Resilience Plan.
Amendments across financial system laws
The bills propose amendments to laws governing the operations of credit institutions, the sale of credit facilities, consumer credit agreements, housing loans, and laws regulating credit purchasers and servicers, securitisation and financial leasing.
Aim to streamline and harmonise provisions
A Finance Ministry representative told the committee the objective is to streamline and harmonise existing provisions while eliminating overlaps between different legislative frameworks.
Credit score based on recent data
The reform includes an upgrade of the existing credit data exchange mechanism to generate a single credit score for each borrower. The score will be based primarily on data from the previous 24 to 36 months and used to assess the likelihood of default over the following 12 months.
Expanded Central Bank oversight and confidentiality requirements
The proposed changes grant expanded powers to the Central Bank to oversee the system, issue operational guidelines, impose penalties for non-compliance and determine usage fees. The framework also introduces an explicit obligation to maintain banking confidentiality for all individuals and entities with access to the data.
Consultation and defined access to data
A representative for the Data Protection Commissioner said a comprehensive consultation process took place. The legislation also defines which organisations are required to submit data and which are entitled to access it, introducing a tiered access system depending on the needs of each entity.
How do you think a single credit score for each borrower could affect access to credit for individuals and businesses?
