McLeod

Lennox McLeod is pouring US$4 million into his company to establish it as a credit bureau, though Jamaican lawmakers are yet to debate legislation that would sanction the operation.

McLeod has been building out Premier Credit Bureau Limited since 2006, and hopes to launch the bureau in July, having pitched the service to banks and other institutions.

Wednesday Business was unable to ascertain whether there were other players as advanced in their planning.

But one operator in the business of asset recovery, who said there was at least one other investor speaking with financial institutions, told Wednesday Business that established companies like his were reluctant to take the plunge because of the demands of the banks.

Like Multilink

"The banks are asking for a stake," he said. "They want it to operate like Multilink."

But Patrick Hylton, boss of Jamaica's largest bank by assets and president of the Jamaica Bankers' Association (JBA), said the companies that have approached NCB are the ones making the pitch to operate as partners.

"These have all been expressions of interest to date as far as I am aware and, as for NCB in particular, nothing has been presented or agreed as confirmation of any partnership," Hylton said Tuesday.

"If we do engage in detailed dialogue with an entity wishing to establish a bureau, I am unable to say at this point what, if any, commercial interest we would wish to pursue, as this has not yet been properly contemplated or determined."

McLeod confirmed that his pitch to the banks did include a similar offer.

The passage of the credit reporting bill that he and other prospective credit bureaus would be banking on to launch into business is under review by a special committee of Parliament prior to being put to a vote in the House.

"Premier Credit was registered in 2006 but it is not trading because we needed to develop/build the software that would operate the bureau and which took some time - approximately two years - to develop," said McLeod.

US$2 million on software

He has spent US$2 million on the software, and figures he will need another US$2 million of capital to acquire hardware, and other equipment to operate the system.

"In the system development life cycle, we are at the testing stage with the software, just ensuring that it meets the requirement of users and financial institutions," McLeod said.

The legislation being reviewed will allow companies like Premier to compile and store financial information on individuals and companies and, in turn, provide credit history reports to regulators and financial institutions - as established in the law.

McLeod says he has been meeting with various institutions to promote the service he will be offering.

"We have been meeting with key stakeholders, testing the waters to find out how well it will be received," he said.

Discussions include financial institutions as well as consumer groups, including the Consumer Affairs Commission.

Premier will be offering credit reports and credit scoring, as well as 'alerts' to consumers on changes in their credit status.

The alerts, said McLeod, are a value added service, and will be distinct from the notifications to consumers that credit bureaus will be required by law to provide whenever reports are generated on them at the request of a third party.

Likelihood of defaulting

The credit score, said McLeod, is the assignment of a mathematical value based on several characteristics such as age, income and other criteria and the likelihood of a person defaulting on a loan.

"It is similar to how an insurance company works where younger persons ages say 18-26 may have to pay higher premiums because they are more prone to get into accidents," he said.

The credit score will range in values from 0 to 999. The higher the score, the less likely someone will default.

US$5 to US$7

While the costs for the services are still to be finalised, McLeod indicated that they were likely to be priced between US$5 and US$7.

Other services, likely to come on stream within a year of establishing the bureau, he said, include fraud prevention, anti-money laundering and identity management.

"We have a European partner - Call Credit - that will provide support such as using their services and expertise to help the bureau develop," said McLeod.

"Services such as anti-money laundering and fraud prevention developed by Call Credit we will adopt and customise for the Jamaican market."

The exact details of the contractual arrangement between Premier Credit and Call Credit were not disclosed.

Banks stand to benefit

Hylton, meantime, said it would be to the bank's benefit and ultimately consumers when credit reporting is legally entrenched.

"NCB, like other banks in Jamaica, stand to benefit from reduced operating costs in the area of bad debt management and collection with the introduction of a central credit bureau," said the JBA president.

"... We actively support the Government's move to have credit bureaux implemented as we believe this will improve the process for granting loans due to the type of borrower information that any such bureau should essentially provide."

sabrina.gordon@gleanerjm.com