CREDIT REPORTING ACT

to provide for the regulation of credit reporting agencies by the Bank of Zambia; the licensing of credit reporting agencies; the establishment of a Credit Registry; the governance and management of credit reporting agencies; the protection of data subjects; information sharing and reporting to enable assessment of the credit worthiness of a data subject; and matters connected with, or incidental to, the foregoing.

[17th October, 2019]

Act 8 of 2018.

SI 70 of 2019.

PART I
PRELIMINARY PROVISIONS

1. Short title

This Act may be cited as the Credit Reporting Act.

2. Interpretation

In this Act, unless the context otherwise requires—

"access log" means a record of every access made to credit information held by a credit reporting agency;

"account" means any account between a credit provider and a data subject that involves the provision of credit, and includes any new account created as a result of a scheme of arrangement involving one or more previous accounts;

"account general data" includes—

(a) the identity of a credit provider;

(b) the account number;

(d) the date when the account was opened and closed;

(e) the type of credit facility and the currency in which that facility was provided;

(f) the approved credit limit;

(g) the repayment period and terms of a credit facility;

(h) the status of the account;

(i) the credit facility maturity date;

(j) particulars for the identification of the asset used as security;

(k) instalment amount payable; and

(l) any other detail as may be prescribed;

"account repayment data" includes—

(a) the amount last due;

(b) the total repayment made towards the previous credit facility;

(d) default data being—

(i) amount past due and number of days past due; and

(ii) date of settlement of amount past due;

"adverse action" means any denial of credit cancellation or an unfavourable change in the terms and conditions of a transaction regarding a data subject based in whole or in part on information contained in a credit report;

"appeals tribunal" means an ad hoc tribunal appointed and convened by the Minister as specified in section 49;

"appropriate authority" means the Minister having responsibility for, or such public body having powers under, any other law over an incorporated or unincorporated entity and the management of credit information, and includes a public or statutory office, body or institution under the following laws—

(a) the Zambia Police Act;

(b) the Narcotic Drugs and Psychotropic Substances Act;

(d) the Anti-Corruption Act, 2012;

(e) the Prohibition and Prevention of Money Laundering Act, 2001;

(f) the Zambia Revenue Authority Act;

(g) the Information and Communication Technologies Act, 2009;

(h) the Banking and Financial Services Act, 2017;

(i) the Companies Act, 2017;

(j) the Corporate Insolvency Act, 2017;

(k) the Standards Act, 2017;

(l) the Compulsory Standards Act, 2017; and

(m) the Competition and Consumer Protection Act, 2010;

"Bank" means the Bank of Zambia established under the Constitution;

"beneficial owner" has the meaning assigned to the words in the Companies Act, 2017;

"chief executive officer" means the principal officer of a credit reporting agency, whether that person is or is not a director;

"company" has the meaning assigned to the word in the Companies Act, 2017;

"constituent documents" means the articles of association, incorporation form and share certificate;

"control" has the meaning assigned to the word in the Companies Act, 2017;

"court" means a court of competent jurisdiction;

"credit" includes—

(a) a loan, an overdraft facility or other kind of credit provided by a credit provider to, and for the use of, a person;

(b) financing under a lease or hire purchase agreement;

(c) an advance, trade credit or other facility, in whatever form or by whatever name called, whereby the person to whom the benefit is given has access, directly or indirectly, to the funds or property of the person giving it;

(d) a guarantee or any security in relation to the obligations of a person;

(e) any hire purchase, leasing, factoring, debt trading and such similar dealings or transactions; or

(f) any other dealing or transaction as may be prescribed by the Minister, on the recommendation of the Bank;

"credit information" means information relating to a data subject’s—

(a) identification, full name and date of birth;

(b) place of residence and previous places of residence;

(d) place of employment and previous places of employment;

(e) paying habits and outstanding debt obligations;

(f) assets and inquiries made of credit history or information relating to a legal entity or business that would identify the legal entity or business information on incorporation;

(g) tax, directors governance, outstanding debt obligations, assets or credit history; or

(h) other business details;

"credit provider" means a person who carries on a business involving the provision of credit, and includes—

(a) a financial service provider within the meaning of the Banking and Financial Services Act;

(b) a subsidiary of a financial service provider;

(d) a person whose business, whether or not the person carries on any other business, is that of providing finance for the acquisition of goods by way of leasing or hire purchase;

(e) a person who provides goods or services on credit; or

(f) any other person as may be designated by the Bank;

"Credit Registry" means the database established by the Bank under section 17;

"credit report" means information relating to the financial obligations of a person, including the payment history of such obligations, guarantees, publicly available information and any other relevant data compiled by a credit reporting agency;

"credit reporting agency" means a credit registry or company licensed in accordance with this Act, to collect credit reports and process information on the credit status of a data subject;

"data controller" has the meaning assigned to the words in the Electronic Communications and Transactions Act, 2009;

"data provider" means a person providing credit information to a credit reporting agency or credit provider;

"data system" means any system automated or otherwise, which is used, in whole or in part, by a credit reporting agency for the processing of credit information, and includes any document and equipment forming part of the system;

"data subject" has the meaning assigned to the words in the Electronic Communications and Transactions Act, 2009;

"licence" means a licence granted in accordance with section 9;

"personal information" excludes information about a data subject on—

(a) credit information;

(b) the data subject’s name, present and past addresses, taxpayer registration number or other numerical reference, cataloguing or reference scheme used for identification purposes; and

"processing" means collecting, recording, holding, storing or transferring credit information or carrying out an operation or sets of operations on the credit information, including—

(a) organisation, adaptation or alteration of credit information;

(b) retrieval, consultation on, or use of, credit information; or

"Register" means the Register established and maintained in accordance with section 5;

"Registrar" means the person appointed as Registrar of Banks and Financial Institutions in accordance with the Banking and Financial Services Act, 2017;

"regulatory statement" has the meaning assigned to the words in the Banking and Financial Service Act, 2017;

"senior management officer" includes the chief executive officer or any other officer as determined by the Bank;

"significant shareholder" has the meaning assigned to the words in the Banking and Financial Services Act, 2017;

"subscriber" means a person who has entered into a subscriber agreement with a credit reporting agency; and

"subscriber agreement" means a written agreement providing a subscriber with access to credit information held by a credit reporting agency.

3. Application of Act

This Act applies to credit reporting agencies licensed under this Act, credit providers, data subjects, data providers and any other person designated by the Bank.

PART II
ADMINISTRATION

4. Administration of Act

(1) The Act shall be administered by the Bank.

(2) The Bank shall—

(a) licence, regulate and supervise credit reporting agencies;

(b) maintain proper standards of conduct and acceptable credit reporting practices;

(d) protect the integrity of the credit reporting system; and

(e) do any other things that are necessary or incidental to the performance of its functions as provided in this Act.

PART III
LICENSING OF CREDIT REPORTING AGENCIES

5. Register of credit reporting agencies

(1) The Bank shall establish and maintain a Register of credit reporting agencies in which shall be entered—

(a) particulars of a credit reporting agency;

(b) notices of matters which are required, in accordance with this Act to be entered in the Register; and

(2) The Register may be established and maintained wholly or partly in electronic form.

6. Inspection of Register

(1) Subject to this Act, the Register shall, on payment of a prescribed fee, be open for inspection by the public during normal working hours.

(2) A copy of an entry in the Register or an extract from the Register certified by the Registrar, may be admitted in evidence without further proof and without production of the original copy.

7. Operating credit reporting agency without licence

(1) A person shall not—

(a) establish, maintain or hold out as providing or maintaining a credit reporting agency, unless that person is licensed in accordance with this Act; or

(b) assist in establishing or maintaining, or hold out as providing or maintaining, or carrying on a business as a credit reporting agency that is not established and operated by a company licensed in accordance with this Act.

(2) A person who contravenes this section commits an offence and is liable, on conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding one year, or to both.

8. Application for credit reporting licence

(1) A company may apply to the Bank for a licence to establish and operate a credit reporting agency in the prescribed manner and form on payment of a prescribed fee.

(2) An applicant may withdraw an application for a licence, by notice in writing to the Bank at any time before the licence is granted or rejected.

(3) The Bank shall, in considering an application for a licence, made in accordance with sub-section (1), have regard to the—

(a) capital resources of the applicant;

(b) adequacy and integrity of the operational systems of the applicant;

(d) transparency of the legal, operational, managerial, governance and ownership structures; and

(e) character and experience of the directors, shareholders, beneficial owners or persons proposing to be concerned in the management of the business.

(4) This section does not apply to a Bank licenced under the Banking and Financial Services Act, 2017.

9. Consideration and grant of credit reporting agency licence

(1) The Bank shall, where the applicant meets the requirements of this Act, within 120 days of receipt of the application for a credit reporting licence as provided under section 8, grant the licence.

(2) A licence granted under sub-section (1) shall authorise the holder of the licence to—

(a) obtain and receive credit information;

(b) process, store, update, manage and disseminate information of data subjects in accordance with this Act;

(d) develop a credit scoring system;

(e) provide specialised literature relating to its activities;

(f) carry out market and statistical research relating to matters set out in this Act; and

(g) carry out any other activity as may be prescribed.

(3) A credit reporting agency shall not provide or offer to provide services in breach of the terms and conditions of the licence.

10. Validity of licence

(1) A licence granted under section 9 shall be subject to the terms and conditions attached to that licence.

(2) A licence granted under section 9 shall be subject to the payment of an annual prescribed fee and to compliance, by the licensed credit reporting agency, with the conditions of the licence and this Act and regulations and rules made under this Act.

11. Variation of licence

The Bank may, on the application of a licensee, vary the terms and conditions of a licence as specified by the Bank.

12. Rejection of application

(1) The Bank shall, within 120 days of receipt of an application for a credit reporting licence, reject an application by an applicant to operate a credit reporting agency if the—

(a) activity or business to be carried out by the applicant contravenes any law;

(b) applicant submits false information in relation to the application;

(d) past conduct of the applicant, or any officers, directors or representatives of the applicant will affect carrying on the business with honesty and integrity in accordance with this Act, or any term or condition of the licence;

(e) applicant has made a false or misleading statement, with respect to any matter that the Bank considers material, in an application or in any of the information or material submitted to the Bank in support of an application;

(f) applicant directly or indirectly holds a controlling interest or share in a debt collection agency or a regulated entity; or

(g) the issuance of the licence is not in the public interest.

(2) The Bank shall, where the Bank rejects an application for a licence, inform the applicant, in writing, and give reasons for the rejection.

13. Surrender of licence

(1) Where a licensed credit reporting agency decides to cease operations, it shall notify the Bank, in writing, and shall agree with the Bank the terms and conditions of the surrender of the licence, with particular reference to anything done or any benefit obtained under the licence.

(2) Where a credit reporting agency surrenders its licence, in accordance with sub-section (1), the licence shall be cancelled and the credit reporting agency shall cease to be entitled to any benefits.

14. Transfer of licence

A licence shall not be transferable, except in the event of an amalgamation or other corporate restructuring.

15. Suspension or cancellation of licence

(1) Subject to this Act, the Bank may suspend or cancel a licence if the licensed credit reporting agency—

(a) obtained the licence by submission of false information or statement;

(b) contravenes this Act, any other law or any terms and conditions of the licence;

(d) enters into receivership or takes any action for the winding up or dissolution of the company;

(e) enters into any scheme of arrangement, other than for purposes of amalgamation or corporate restructuring; or

(f) is the subject of an order that is made by a court for its compulsory winding-up or dissolution.

(2) The Bank shall, before suspending or cancelling a licence in accordance with sub-section (1), notify the credit reporting agency, in writing, of such an intention and—

(a) give the reasons for the intended suspension or cancellation; and

(b) require the agency to show cause, within a period not exceeding 30 days, why the licence should not be suspended or cancelled.

(3) The Bank shall not suspend or cancel a licence, as provided in this section if the credit reporting agency takes remedial measures, to the satisfaction of the Bank, within the period referred to in sub-section (2).

(4) The Bank shall, where the Bank suspends or cancels a licence, in accordance with this section, publish the suspension or cancellation, as the case may be, in the Gazette and a daily newspaper of general circulation in Zambia.

16. Handling of credit information when licence cancelled

(1) A credit reporting agency whose licence has been cancelled, in accordance with section 15, shall, within a period determined by the Bank, handover all credit information within its possession to the Bank.

(2) The Bank may, on receipt of the credit information referred to in sub-section (1)—

(a) keep the information in the Credit Registry; or

(b) hand over the information to another credit reporting agency, on the terms that the Bank may determine.

(3) Where the Bank decides to hand over information to another credit reporting agency as provided under sub-section (2)(b), that credit reporting agency shall notify, in writing, all data subjects whose information has been handed over to it.

(4) An obligation in relation to a data subject and consent previously obtained from a data subject by a credit reporting agency whose licence has been cancelled, in accordance with section 15, shall pass to the credit reporting agency to which the information is handed over as provided under sub-section (2)(b).

(5) A person who contravenes sub-section (1) commits an offence and is liable, on conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding one year, or to both.

PART IV
CREDIT REGISTRY

17. Establishment of Credit Registry

(1) The Bank shall establish, maintain and operate a Credit Registry which shall be a database for credit information.

(2) A credit provider regulated under the Banking and Financial Services Act, 2017 shall supply credit information to the Credit Registry.

(3) The Bank may impose the obligation to supply credit information to the Credit Registry on other credit providers.

(4) The Bank shall prescribe the category of persons who may access and the manner in which information from the Credit Registry may be accessed.

(5) A person who contravenes this section commits an offence and is liable, on conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding one year, or to both.

18. Retention of information on Credit Registry

The Bank may retain information kept on the Credit Registry for at least 10 years, except that—

(a) in the case of credit information which identifies a data subject and relates to a credit application, for a period not exceeding six months;

(b) in the case of credit information which identifies a data subject and relates to a credit agreement, for a period not exceeding five years; and

PART V
MANAGEMENT OF CREDIT REPORTING AGENCY

19. Beneficial interest and control of credit reporting agency

(1) A person shall not acquire shares or a beneficial interest in a credit reporting agency without the prior written approval of the Bank.

(2) A person shall not acquire a beneficial interest in a credit reporting agency if that person is a credit provider regulated under the Banking and Financial Services Act, 2017 or that person’s significant shareholder.

(3) A person who contravenes this section commits an offence and is liable, on conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding one year, or to both.

20. Owning of shares in another credit reporting agency

(1) A person who controls a credit reporting agency shall not own any share in another credit reporting agency, or acquire and maintain control over another agency, without the prior written approval of the Bank.

(2) A person shall not hold shares in a credit reporting agency as a nominee.

21. Appointment of board of directors

(1) A credit reporting agency shall have a board of directors with a majority of its members being non-executive.

(2) A person shall not be appointed as a member of the board of directors of a credit reporting agency without the prior written approval of the Bank.

(3) A person shall not be appointed as a member of the board of directors of a credit reporting agency if the person is a member of a board of a credit provider regulated under the Banking and Financial Services Act, 2017 or another credit reporting agency.

(4) Where a director of the board or a member of the senior management of a credit reporting agency ceases to hold office, the credit reporting agency shall, within 14 days of such cessation, notify the Bank, in writing, of the cessation and reasons for the cessation.

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