The credit data system will lead to enhanced competition in the credit market, both within the banking system and by nonbank entities. The system will make it possible for a customer to receive credit at the optimal terms available to him or her, as generally accepted in many advanced countries, and is expected to change the rules of the game currently in place in the retail credit market.
As established in law, the Bank of Israel will collect credit data from data sources such as credit providers and government authorities, and will transfer them—if the customer is interested in doing so—through credit bureaus, to credit providers authorized to use the data (lenders) and to the customers themselves (borrowers).
The information will only be transmitted to credit providers if the customer provides consent to do so, generally when requesting a loan. The information in the system will enable the customer to receive more valuable offers from lenders that do not know them (in contrast to, for example, the bank in which the customers manage their account), based on the customer’s personal credit repayment history, and thus allow equal terms for competition in the credit market, for the benefit of the customers. The customers, on their end, will be able to manage their steps in a more informed manner and increase their negotiating power vis-à-vis various lenders, when it comes to taking credit.
The Law also allows a customer to independently access—once a year at no charge—the information gathered on him or her in the system, and to transmit it to entities that will provide the customer with advice regarding his or her financial management with regard to credit, all under the conditions set in law.
The information collected refers to credit data from bank and credit card information sources beginning in May 2016, and data from the Postal Bank, the Checks without Cover Section at the Bank of Israel, the Execution Office and the Official Receiver’s office, for a period beginning August 31, 2018.
With the completion of the preparations for operating the system, and with the going into effect of the Law, the public will be able to contact the Bank of Israel and realize its rights under the Law, such as requesting to receive once a year, at no charge, a report that details the information collected regarding the customer. Similarly, the public will be able to realize the right to submit a request to cease collecting information or to submit a request for the information not to be transferred.
Closer to the operation of the credit data system, the Supervisor of Credit Data Sharing at the Bank of Israel, CPA Tsuriel Tamam, will publish additional information regarding the manner in which the public can derive the most benefit from the system and the new law, and how the individual’s rights can be realized.