Legal basis and covered credit system
- Republic Act No. 9510 establishes the Credit Information System Act and provides for the Credit Information Corporation to accredit entities under a credit information framework.
- The Credit Information Corporation (CIC) established under Section 5 of Republic Act No. 9510 accredits Special Accessing Entities under these standards and rules promulgated by the Securities and Exchange Commission.
Purpose, policy, and accreditation control
- Accreditation is designed to establish reliable credit information through an efficient and cost-effective credit bureau industry.
- The number of Special Accessing Entities at any given time is determined solely by the Board of Directors of the CIC to ensure availability of reliable credit information and the financial viability of the credit bureau industry.
- Accreditation decisions are made by the CIC Board of Directors after deliberation and are treated as the final corporate action within the accreditation process.
Core definitions for accreditation
- An Applicant is a stock corporation, incorporated locally or abroad, that applies to the CIC to establish and operate a Special Accessing Entity and may be formed for private purpose, benefit, or end, engaged in credit bureau business.
- The Commission refers to the Securities and Exchange Commission.
- The Corporation refers to the Credit Information Corporation (CIC) established under Section 5 of Republic Act No. 9510.
- Credit Bureau Business is the business of providing credit reports, ratings, and other similar credit information products and services.
- Relevant Government Agencies include: the Department of Finance, Department of Trade and Industry, Bangko Sentral ng Pilipinas, Insurance Commission, and Cooperative Development Authority.
- A Special Accessing Entity (SAE) is a duly accredited private corporation, incorporated in the Philippines, engaged primarily in Credit Bureau Business.
- A Subscription Agreement is the contract between the CIC and the Special Accessing Entity specifying accreditation terms and conditions.
- A Subsidiary is a corporation owned and controlled by the Applicant because of equity ownership of not less than fifty one percent (51%).
Who must qualify and how applicants apply
- The rules apply to Applicants seeking to establish and operate a Special Accessing Entity through the accreditation procedure set forth.
- The CIC prescribes an application period for accreditation applications, which must be not less than one (1) month.
- The CIC must announce the opening of the application period on its website and publish the announcement in a newspaper of general circulation for at least one (1) week.
- Applicants must be engaged in the Credit Bureau Business and may apply to operate under either of these structures:
- A domestic corporation may apply to operate itself as a Special Accessing Entity or establish a Subsidiary to operate as the Special Accessing Entity, subject to undertaking to comply with post-qualification requirements on form, capitalization, or corporate registration to maintain accreditation.
- A foreign corporation may apply to establish a Subsidiary in the Philippines that will operate as the Special Accessing Entity, with the Subsidiary as a post-qualification requirement that must be incorporated in the Philippines in the required form and capitalization and be majority-owned and controlled by the Applicant.
Accreditation requirements and standards
- The CIC evaluates Applicants based on merit using organizational, technical, and operational criteria, including:
- Experience and capability to operate a successful credit bureau business, measured by at least three (3) years, commercial scale, market share, client base, product quality and development, pricing, financial growth and sustainability, customer service, adoption of industry best practices, and track record of compliance with relevant laws, rules, and regulations including other markets where it operates.
- Up-to-date technology adoption and implementation for security, infrastructure, security of premises, and internal control procedures/systems that protect confidential data from improper, unauthorized, or accidental access, use, and loss, and ensure business continuity and data retention during service interruptions.
- A defined and implemented good governance structure and risk management framework, demonstrated through previous credit bureau operations.
- Competent corporate officers, key personnel, and staff, and capability to implement a comprehensive training and education program for development of local credit bureau professionals and staff.
- Business plan feasibility and commercial soundness, focusing on detail, practicality, clarity, innovativeness, and comprehensiveness, including undertakings on providing relevant credit products and services tailored to the local market and developing/improving the local credit bureau business industry.
- Only a Corporation incorporated in the Philippines engaged primarily in the Credit Bureau Business can be a Special Accessing Entity.
- A Special Accessing Entity must have a minimum paid-up capital stock of Sixty Million Pesos (P60,000,000.00).
- The Commission may motu proprio or upon the CIC’s recommendation, in coordination with relevant government agencies, modify, add, or remove accreditation criteria, subject to prior notice.
Accreditation procedure and decision timeline
- The Applicant must submit complete documentary requirements to the CIC within the designated application period declared by the CIC and must pay a non-refundable application fee as prescribed by the CIC.
- The CIC refers the application to an appropriate department or committee for review based on the accreditation criteria.
- The evaluation period is determined by the CIC and must not exceed two (2) months.
- The appropriate department or committee may request additional documents or information from Applicants for fair and accurate comparison of qualifications across accreditation criteria.
- The department or committee prepares an Evaluation Report with assessment and recommendations on which Applicants should be accredited.
- The CIC Board of Directors may require a Supplemental Evaluation Report when additional information is needed for assessment.
- Evaluation reports are recommendatory and not binding on the CIC Board of Directors.
- The CIC Board of Directors deliberates and decides within fifteen (15) working days from receipt of the Evaluation Report or the Supplemental Evaluation Report, whichever is later.
- The CIC informs Applicants with denied applications of the denial and the reasons for denial.
- Applicants denied accreditation do not gain access to Evaluation or Supplemental Evaluation Reports because these reports are treated as confidential due to sensitive trade or proprietary information.
- If the desired number of Special Accessing Entities has not yet been met, Applicants with denied applications or revoked accreditation may re-apply anew within six (6) months after receipt of the denial or revocation, or when the application process is reopened by the CIC.
- Any decision by the CIC regarding accreditation of Special Accessing Entities is final.
Post-qualification, contract execution, and accreditation maintenance
- Within three (3) months from receipt of the grant of accreditation, the Applicant must comply with post-qualification requirements on form and capitalization:
- For a domestic corporation operating itself or establishing a Subsidiary, it must comply with post-qualification requirements on form, capitalization, or corporate purpose.
- For a foreign corporation, it must form a Subsidiary incorporated in the Philippines in the required form and capitalization, and the Subsidiary must be majority-owned and controlled by the Applicant.
- Subscription contract execution is subject to conditions:
- The Special Accessing Entity must be incorporated in the Philippines within three (3) months from receipt of the grant of accreditation, complying with the minimum paid-up capital requirement.
- If the Applicant itself is a Philippine corporation operating as the Special Accessing Entity, it must comply with required form or minimum paid-up capital requirement within three (3) months from receipt of the grant of accreditation.
- Within ten (10) days from receipt of the grant of accreditation, the Applicant must post a performance security bond of Three Hundred Thousand Pesos (PHP300,000.00) in favor of the CIC, forfeited if subscription agreement is not executed for causes not due to fault of the CIC.
- Any change in the Special Accessing Entity’s ownership or control is a ground for suspension or revocation of accreditation unless the CIC finds the new owner/holder of controlling interest complies with accreditation criteria and the public interest is served.
- Accreditation is granted on these terms:
- Accreditation is valid for five (5) years, commencing from the date stated in the Subscription Agreement, unless sooner revoked or suspended.
- The Special Accessing Entity must pay the yearly subscription fee as determined by the CIC and approved by the Commission.
- The CIC provides ongoing supervision of the Special Accessing Entity.
- Credit data processing, accessing, dissemination, and storage obtained from the CIC must be wholly done within Philippine jurisdiction; if the Special Accessing Entity has offshore data processing facilities, such facilities must be maintained separately from the facilities used by the Special Accessing Entity.
- Suspension or revocation grounds include:
- Failure to implement the Business Plan or commence full operations within six (6) months from receipt of accreditation.
- Failure to submit periodic reports required to be submitted to the CIC under rules and guidelines to be issued by the CIC.
- Providing fraudulent or false information in procuring or maintaining accreditation.
- Violating confidentiality, misusing, or destroying the integrity of consolidated credit information received from the CIC.
- Violating terms and conditions of the Subscription Agreement.
- Violating Republic Act No. 9510 or its implementing rules and regulations, and other issuances by the Commission and/or the CIC.
- The grant of accreditation does not limit the CIC’s continuing right to request information or documents the CIC deems necessary to maintain accreditation.
Effectivity, publication, and filing
- The rules take effect fifteen (15) days after publication in two (2) newspapers of general circulation.
- The Commission Secretary must immediately file:
- three (3) certified copies with the University of the Philippines Law Center; and
- one (1) certified copy each with the Department of Finance and the Supreme Court of the Philippines.
- The Circular is signed for adoption by TERESITA J. HERBOSA, Chairperson, and bears the location/date Mandaluyong City, 10 July 2015.