Home Money CIC’s Mandatory Compliance Guidelines for Financial Institutions

CIC’s Mandatory Compliance Guidelines for Financial Institutions

by Lucian Knight

In a bid to fortify the accuracy of credit reports, the Credit Information Corporation (CIC) has rolled out stringent guidelines for mandatory compliance by financial institutions.

Governed and supervised by the Securities and Exchange Commission (SEC), the state-owned CIC takes a proactive stance under the Republic Act No. 9510, also known as the Credit Information System Act of 2008.

Comprehensive Guidelines under CIC Circular No. 2023-04

Under the purview of CIC Circular No. 2023-04, aptly named "Implementing Guidelines for the Compliance of all Submitting Entities under the Credit Information System Act," the CIC has not only introduced mandatory compliance measures but has also implemented a Compliance Rating System. This system serves as a vigilant monitor, ensuring the faithful compliance of all Submitting Entities in Production (SEPs). Additionally, a Compliance Assistance Fee has been instituted to cover the costs associated with providing technical support and enforcing compliance.

Aim for Financial Stability

President and Chief Executive Officer Ben Joshua A. Baltazar emphasizes the pivotal role of CIC in contributing to financial stability. By providing real-time access to reliable and accurate credit information, the CIC plays a crucial role in reducing systemic risk within the financial ecosystem. Baltazar underscores the significance of implementing these guidelines and sanctions, stating, "Curbing non-compliant behavior of covered entities will safeguard the effectiveness of the Credit Information System."

Structured Submission Process

Financial institutions undergo a meticulous three-stage process before they gain authorization to submit live credit data to the Credit Information System. The stages include online registration, testing and validation, and the final submission of live credit data to production. This structured approach ensures the reliability of the credit data submitted by consumers.

Corrective Actions for Non-Compliance

In the event of non-compliance, financial institutions can face a range of corrective actions. These actions include participation in one-on-one technical training sessions, issuance of letters of compliance, reporting to government regulatory agencies such as Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Cooperative Development Authority, and Insurance Commission. Public warnings for delinquency and the imposition of administrative sanctions and penalties are also on the table.

Financial Implications of Non-Compliance

Administrative sanctions or fines for non-compliance with initial obligations range from PHP 1,000.00 to PHP 30,000.00. Non-payment of the Compliance Assistance Fee within the prescribed period can result in late payment charges, adding an extra layer of accountability for financial institutions.

Empowering Financial Decision-Making

President and CEO Baltazar concludes by highlighting the ultimate goal of accurate credit reporting. He states, "Ultimately, an accurate credit report empowers not only the financial institutions in their credit decision-making but also provides individuals and businesses a clearer perspective of their credit standing. It informs them about their borrowing behavior, enabling them to better manage their finances."

Stay Informed with CIC

To stay updated on financial institutions already submitting live credit data to the CIC, visit the official CIC website. For the latest information and updates on CIC's activities and events, follow the official Facebook page or reach out via email at [email protected]. The CIC is committed to transparency and empowering both financial institutions and individuals through accurate credit information.

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