 "CERC takes a call on sharing of customer information with credit utility cos")
The Central Electricity Regulatory Commission has formed a working group to examine the recommendation of the Reserve Bank of India ( RBI) urging electricity utilities to share customer information with credit utility companies.
As per the terms of reference, the CERC could engage with RBI directly for further clarifications before submission of the final report to the forum of regulators. According to officials, it is a sensitive issue as these are issues affecting one’s private information.
Besides, energy and financial services are two very different commodities. A working group was set up by the RBI to work out modalities for widening the source of credible information by sourcing information from energy utilities which provide basic necessities, primarily electricity.
The issue before CERC is that sharing customer information invites risk of individual’s privacy rights and personal information. Thus various firewalls need to be created to avoid legal hassles.
In fact, the working group of RBI itself has recognized the draft of the new financial sector code Financial Sector Legislative reforms Committee (FSLRC) which has a well defined provision for protection of personal information, explained officials.
Summararily these are, prohibition on collection of personal information beyond what is required for providing the relevant financial service, a requirement to maintain confidentiality of personal information, unless the consumer has consented to the disclosure or it is otherwise permitted by law and an obligation to maintain accurate, up-to-date and complete personal information, and to allow consumers reasonable access to their personal information.
However powers have been given to the regulator to specify additional requirements, exempt some financial service providers from application of this protection and establish mechanisms to ensure that consumers can access their personal information, under FSLRC.
The RBI in its working group report is of the view that notwithstanding the data quality and completeness issues, the lending institution should start using these information into their decision making process as unless the institutions use the data/information from the credit information companies in their decision making process and for pricing of their loan products, the completeness of information cannot be expected to improve.
A robust customer redressal system would also go a long way in improving the quality of information, by making the lenders aware about the importance of providing accurate data.
The CICs need to be sensitive to the grievances of the customers and provide redressal in a timely manner. This would not only improve the quality of data but also lend credence to the utility of the credit information system in the country.
As per international best practices, various reports suggest that energy including electricity and power is an essential service. Access to electricity and gas for heat and light must not be treated in the same way as access to credit in financial terms. It is imperative that data and information held by the industry is up to date, relevant and accurate.
It is also vital that customers can easily contact their energy supplier and resolve any issues if incorrect data or false information is uploaded onto a customer credit file.
Credit reference information must not be used on its own as a debt management tool since it is vital that energy suppliers seek to understand their customers' circumstances and consider the ability to pay when agreeing any debt repayment plan.
Besides, any conditions placed on the supply of energy as a result of a credit reference check must be proportionate and fair to the consumer and vulnerable consumers should not be unfairly penalised by unaffordable security deposits or other disproportionate conditions/unfair terms to supply.
Internationally, under this data protection contour, the credit reference works on a principle of reciprocity where all suppliers are able to share full (negative and positive) data.
The reciprocity with credit information agencies should ensure accurate customer data, reliable system for capturing consumer information, trained manpower capable enough to understand the impact that sharing information with credit reference agencies will have on their.
Most importantly, they should ensure correct processes and procedures are in place to query and ‘hold’ accounts if there is a dispute which might have a negative impact on customers credit record.
As per the terms of reference, the CERC could engage with RBI directly for further clarifications before submission of the final report to the forum of regulators. According to officials, it is a sensitive issue as these are issues affecting one’s private information.
Besides, energy and financial services are two very different commodities. A working group was set up by the RBI to work out modalities for widening the source of credible information by sourcing information from energy utilities which provide basic necessities, primarily electricity.
The issue before CERC is that sharing customer information invites risk of individual’s privacy rights and personal information. Thus various firewalls need to be created to avoid legal hassles.
In fact, the working group of RBI itself has recognized the draft of the new financial sector code Financial Sector Legislative reforms Committee (FSLRC) which has a well defined provision for protection of personal information, explained officials.
Summararily these are, prohibition on collection of personal information beyond what is required for providing the relevant financial service, a requirement to maintain confidentiality of personal information, unless the consumer has consented to the disclosure or it is otherwise permitted by law and an obligation to maintain accurate, up-to-date and complete personal information, and to allow consumers reasonable access to their personal information.
However powers have been given to the regulator to specify additional requirements, exempt some financial service providers from application of this protection and establish mechanisms to ensure that consumers can access their personal information, under FSLRC.
The RBI in its working group report is of the view that notwithstanding the data quality and completeness issues, the lending institution should start using these information into their decision making process as unless the institutions use the data/information from the credit information companies in their decision making process and for pricing of their loan products, the completeness of information cannot be expected to improve.
A robust customer redressal system would also go a long way in improving the quality of information, by making the lenders aware about the importance of providing accurate data.
The CICs need to be sensitive to the grievances of the customers and provide redressal in a timely manner. This would not only improve the quality of data but also lend credence to the utility of the credit information system in the country.
As per international best practices, various reports suggest that energy including electricity and power is an essential service. Access to electricity and gas for heat and light must not be treated in the same way as access to credit in financial terms. It is imperative that data and information held by the industry is up to date, relevant and accurate.
It is also vital that customers can easily contact their energy supplier and resolve any issues if incorrect data or false information is uploaded onto a customer credit file.
Credit reference information must not be used on its own as a debt management tool since it is vital that energy suppliers seek to understand their customers' circumstances and consider the ability to pay when agreeing any debt repayment plan.
Besides, any conditions placed on the supply of energy as a result of a credit reference check must be proportionate and fair to the consumer and vulnerable consumers should not be unfairly penalised by unaffordable security deposits or other disproportionate conditions/unfair terms to supply.
Internationally, under this data protection contour, the credit reference works on a principle of reciprocity where all suppliers are able to share full (negative and positive) data.
The reciprocity with credit information agencies should ensure accurate customer data, reliable system for capturing consumer information, trained manpower capable enough to understand the impact that sharing information with credit reference agencies will have on their.
Most importantly, they should ensure correct processes and procedures are in place to query and ‘hold’ accounts if there is a dispute which might have a negative impact on customers credit record.