INTRODUCTION
The Federal Law No. 6 of 2010 on Credit Information regulates the activities of Credit Information of an individual including its request, collection, keeping, analysis, classification, use, circulation and protection and whatever relates to such Information.
The law defines Credit Information as information that indicates a person’s eligibility and creditworthiness. Such information may include a person’s financial data, financial obligations, current and previous payments, financial rights, including revenue, and movable and immovable assets.
The law has resulted in the creation of a credit database with a single source of reliable data enabling lenders to assess the creditworthiness of a borrower.
CREDIT INFORMATION
Any person entitled to receive the Credit Information Report shall obtain the consent of the person about whom they wish to receive such report. However, no such consent is required for requesting an individual’s Credit Index score.
CREDIT BUREAU
In accordance with the Federal Decree Law, the UAE government established the Al Etihad Credit Bureau which is accorded with the responsibilities of ‘the Company’ in the Credit Information law.
The bureau has the exclusive right to request, collect, keep, analyze, classify, use and circulate financial data relating to the creditworthiness of an individual. Any other person or legal entity is prohibited from exercising any of the above-stated activities.
The bureau has the power to request the credit information of a person for preparing and developing its credit information database and does not require the consent of the concerned individual to create such a database. The bureau may request such information from commercial banks or other financial institutions in the UAE.
DATA PROTECTION AND PRIVACY
The law deals with several concerns related to data protection and privacy wherein:
-Article 5 of the law however specifically bars the collection and circulation of any information that directly or indirectly relates to a person’s private life, beliefs and health conditions,
-Article 8 specifies requiring the consent of the individual before issuing any credit information report relating to such person,
-The law imposes an obligation to use the credit information only for the specific purpose for which it was requested and to keep the information confidential,
-The data subject also has a right to correct any errors relating to his or her credit information.
– The law imposes obligations on the bureau to protect the Credit Information by creating security measures to protect the information from loss or damages.
PENALTIES
The law imposes an imprisonment of two years and/or a fine of AED 50,000 for a person for obtaining and revealing credit information through unauthorized means. Further, a similar fine is imposed for submitting any incorrect Credit information to the Bureau in bad faith. Violation of any other provision of the law may result in imprisonment or a fine of AED 10,000.
CONCLUSION
The Credit Information Law passed in 2010 has comprehensive provisions to address the concerns of not just the individuals concerned but also of the lenders that may require such information to assess the creditworthiness of a borrower. The system created will enable the banks to avoid lending money to individuals with bad past records. This will result in reduced loan default and encourage individuals to be responsible with the credit they take.
For more information, you may contact:
Thomas Paoletti
Francesca Romana Valeri
Fauzia Khan
