Interesting times for credit information
Jinfo Blog

11th November 2009

By Tim Buckley Owen

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When you consider the bashing that the reputation of parts of the credit information industry has endured over the past year or so, it’s hardly surprising that it’s now facing financial challenges. And when the Chinese authorities further complicate matters by proposing restrictive regulation of credit information in their country, the industry faces even more interesting times. Despite the continuing economic downturn, revenues from financial information are forecast to hold up because demand for core information and analytics remains strong, according to the Credit & Financial Information: 2009 Market Forecast and Trends Report from Outsell (purchase details at http://digbig.com/5bapyb). However, it expects revenues from credit information services to show a single-digit decline in 2009 and thereafter recover slowly as rising unemployment dampens consumer demand. The report also looks at credit rating agencies as a separate issue – and it is of course they that have faced the biggest challenges because of their perceived share of responsibility for the credit crunch and the much tighter regulation that they now face on both sides of the Atlantic (http://www.vivavip.com/go/e19183 and http://www.vivavip.com/go/e22305). It’s important not to conflate the different types of credit information (see http://www.vivavip.com/go/e19183 for example) – but that’s exactly what the Chinese authorities appear to be doing with their proposed new omnibus bill covering consumer and commercial credit reporting as well as the credit rating industry. The warning comes in an Outsell Insights briefing prepared by an affiliate company Intrepid Explorers Inc (available to account holders at http://digbig.com/5bapyc). If China's regulators have their way, private sector credit information and rating services would be severely restricted, while the China Credit Reference Center, which is owned by the regulator the People’s Bank of China, would be exempt from the regulations and become a monopoly. Quite apart from the restrictions it would impose, the legislation would regulate three industries which serve different purposes, have different customer bases and use different sets of data, the Insight continues. Credit information users and suppliers have closed ranks in opposition, and it notes with encouragement that much of that opposition comes from within China. But the Chinese authorities can’t always act with impunity; they do face global pressure to trade fairly. It was pressure from the European Union – a vital trading partner for China – that eventually forced it to sign a memorandum of understanding allowing foreign financial information companies to supply their services direct to Chinese clients instead of having to go through the China Economic Information Service (http://www.vivavip.com/go/e15679). No doubt a combination of protectionism and censorship is once again the motive behind this latest move. The price of ensuring the continuing credibility of Chinese business information is eternal vigilance.

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