Eva Dauberton
News Editor
CFPB report shows credit reporting system shortcomings
The Consumer Financial Protection Bureau (CFPB) has released its key findings from examinations of the credit reporting system as outlined in Supervisory Highlights, Issue 32 (Spring 2024). According to the report, consumer reporting companies (CRCs) failed to exclude alleged identity theft or human trafficking information from their credit reports. Furnishers, the companies that provide information to CRCs, also failed to correct false or fraudulent information supplied to CRCs.
Some context
The Fair Credit Reporting Act (FCRA) and its implementing regulation, Regulation V, require CRCs and furnishers to reasonably investigate disputes and maintain accuracy in the information provided. The rules also cover the obligations in case of consumer-alleged identity theft and adverse information resulting from human trafficking. The CFPB has prioritised examinations in this area due to long-standing issues.
Key takeaways
The report covers selected examinations completed from 1 April 2023 to 31 December 2023 and indicates that:
- CRCs failed to block or remove information related to identity theft and human trafficking.
- CRCs accepted information from unreliable furnishers.
- Furnishers provided information to CRCs they knew was false.
- Furnishers did not follow the requirements for dispute investigations and identity theft.
In response to the CFPB’s findings, the involved CRCs and furnishers are taking corrective actions.
Next steps
In the report, the CFPB reminds firms of recent regulatory and enforcement actions that have been taken to strengthen consumer reporting and furnishing systems. This includes the launch of a rulemaking in September 2023 to remove certain types of medical debt from credit reports, the issuance of advisory opinions addressing inaccurate background check reports and deficiencies in file disclosures, a $60 million fine for Toyota Motor Credit for illegal lending and credit reporting misconduct in November 2023, and a $23 million fine for TransUnion in October 2023 for illegal rental background checks and credit reporting practices.
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SFC CEO presents strategic initiatives to enhance Hong Kong competitiveness
Julia Leung, the CEO of the Securities and Futures Commission (SFC), addressed the HSBC Global Investment Summit to debunk the misconception that Hong Kong "is not quite its former self."
She presented market data and discussed strategic initiatives by the SFC aimed at enhancing the competitiveness of the Hong Kong market.
Hong Kong's financial industry remains strong and continues to attract foreign investment
Leun presented the latest figures on SFC-licensed firms, stating that these have increased by over 4% to around 3,250 over the past three years, with a 13% surge for advisory and asset management firms. Foreign-controlled firms accounted for approximately 15% of licensed corporations each year from 2020 to 2023. Additionally, she highlighted a 24% increase in hedge fund managers, private equity fund managers, and family offices in the past three years.
A five-pronged plan to enhance Hong Kong market's competitiveness
Leung detailed the SFC's five-pronged plan to enhance the competitiveness of the Hong Kong market. These actions, outlined in the SFC Strategic Priorities for 2024-26 published in January, include:
- Improving market liquidity and efficiency
- Expanding connectivity to maintain Hong Kong's position as a premier capital intermediary.
- Cementing Hong Kong's role as an offshore RMB hub through RMB internationalisation.
- Leading financial market transformation through technology and ESG.
- Attracting firms in growth industries to the IPO market.
Strategy-adapted regulatory initiatives
Leung highlighted a number of regulatory initiatives aimed at achieving strategic goals. In particular:
- The establishment of the Task Force on Enhancing Stock Market Liquidity in August 2023 which aims to explore various ways to reduce market friction, lower transaction costs, and enhance capital efficiency.
- Plans to expand and enhance the Mainland-Hong Kong Connect schemes, with upcoming initiatives such as block trading, RMB counter inclusion, REIT Connect, and relaxation of certain requirements like the investment quota for Wealth Management Connect.
- The development of RMB-denominated investment products and their hedging instruments in the market.
- The launch of the new Chapter 18C listing regime in March 2023, which aims to facilitate the IPOs of specialist technology companies.
- On the ESG front, the alignment of corporate reporting standards with the IFRS Sustainability Disclosure Standards, the launch of the carbon emission calculation tool and the establishment of the voluntary code of conduct for ESG data providers.
- In terms of virtual assets, she noted the authorisation of HSBC's gold token as the first public product of this kind.
In her closing remarks, Leun said, "As the biggest international intermediary for China's capital markets, Hong Kong will continue to thrive on the nation's long-term growth story by staying resilient and agile in strengthening both existing and new market connections."
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FINTRAC releases new compliance guidance on suspicious transactions reporting
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has released a compliance guidance that clarifies suspicious transactions reporting obligations. This guidance supersedes previous guidance provided in the “What is a suspicious transaction report” and the “Reporting suspicious transactions to FINTRAC” pages.
The guidance covers various aspects, such as the definition of a suspicious transaction, reasonable grounds for suspicion, when and how to submit a Suspicious Transaction Report, the reporting form for suspicious transactions, additional requirements related to suspicious transactions, reporting subsequent suspicious transactions, FINTRAC’s expectations for completing a Suspicious Transaction Report, and common deficiencies to avoid.
To note, reporting entities also include authorised foreign banks operating in Canada.
This guidance is effective as of 6 April 2024.
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