The first section of this report briefly introduces the topic and explains the role of credit reporting systems in the financial infrastructure.

The second section briefly discusses the role of the different types of CRSPs and recognizes alternative credit reporting service providers as emerging players in the industry. It also sheds light on the use of new technologies in credit reporting and their potential implications.

The third section discusses GPCR as published by the ICCR in 2011. GPCR represents the only universal set of standards for credit reporting as included under the Financial Stability Board (FSB) noncore compendium of standards for the financial sector. GPCR’s five principles describe the respective roles of key stakeholders, accompanying guidance, and recommendations for effective oversight. The section elaborates on the relevance of GPCR for developing key principles for the effective regulation and supervision of CRSPs. In doing so, it provides numerous examples of how GPCR applies in the regulatory frameworks of different jurisdictions around the globe.

The fourth section discusses the major types of risks related to credit reporting systems. These risks are not necessarily mutually exclusive and interrelate in many ways, but they can be termed strategic risk, operational risk, cyber risk, model risk, reputation risk, and legal and compliance risk, among others. The section focuses on the evolving role of credit reporting with a forward-looking approach to identify risks and vulnerabilities.

The fifth section discusses the key considerations for regulatory and supervisory principles. The section outlines the preconditions for developing and implementing an effective regulatory and supervisory framework and explains the scope of application of the key principles and the responsibilities of regulatory and supervisory authorities.

The sixth section then introduces twelve principles for safe and efficient credit reporting along with the roles and responsibilities of the supervisory authority.

The seventh section of the report discusses the suggested approach authorities should adopt in applying the principles. This discussion emphasizes the importance of maintaining holistic oversight of how the credit reporting system functions to ensure that the players in credit reporting activities can manage the risks related to credit information sharing.

Finally, the eighth section presents the methodology for assessing the regulatory and supervisory frameworks at the jurisdictional level. The assessment methodology is primarily intended for international financial institutions (IFIs), but it is also helpful for national authorities and other internal and external assessors. Assessment responsibility for observing adherence to the key principles primarily lies with individual countries’ regulatory and supervisory authorities.

Key Principles for Effective Regulation and Supervision of Credit Reporting Service Providers.pdf

Source: World Bank