In a recent high-profile case, CTOS encountered a notable legal hurdle as a court sided with a plaintiff asserting the inaccuracy of the company’s credit-scoring outcomes. This legal development raised substantial questions about the validity and reliability of credit scoring, particularly as administered by one of the nation’s largest credit scoring service providers.
Needing to have more clarity on the situation, BusinessToday, reached out to CTOS Data Systems Sdn Bhd, Group Chief Executive Officer, Erick Hamburger to find out more about the case,
“We have been advised that there is a basis for an appeal and a good chance of success. Consequently, we have lodged a Notice of Appeal to the Court of Appeal.” The case is still under appeal, with a hearing scheduled for July 9th, so further comments are limited at this stage.
Despite the ongoing legal proceedings, CTOS said it remains confident in its processes and compliance with regulations. “As a CRA, we are governed by the CRA Act, and we have always strictly adhered to all regulations required. Our license to operate as a CRA is audited yearly, and we have always been found to be in full compliance with all requirements,” Erick said.
While they do not anticipate major changes to their processes, CTOS told BT it is prepared to work closely with the regulator should any recommendations arise from the case.
Additionally, Erick discussed their current legal challenges, adherence to regulatory standards, and future growth strategies. The conversation provides insights into how CTOS plans to maintain its stellar performance and expand its business horizons.
Legal Challenges and Regulatory Compliance
Erick emphasised that the company ensures the accuracy and legality of its data collection through stringent regulatory compliance and robust cybersecurity measures. All data collection activities are governed by Malaysian legislation and overseen by Bank Negara, which mandates strict guidelines for data management and audits.
“Malaysian government is very good. There’s a legislation around the credit reporting agencies, Bank Negara is very active in ensuring the data is collected. And it follows all the guidelines that the government has laid out and the management of that data,” he said.
The information CTOS gathers comes from reliable sources such as Bank Negara, which adheres to the highest standards of data accuracy, and the Companies Commission of Malaysia (SSM), which provides audited financial statements. Additionally, CTOS collects data from subscribers, including utility companies, telcos, and other service providers, all of whom must comply with the Credit Reporting Agency Act regarding data provision and documentation.
The company takes its responsibility seriously, ensuring that any errors are promptly addressed in accordance with legal procedures. Regular audits further reinforce CTOS’s commitment to data integrity, cybersecurity, and regulatory adherence, giving confidence to businesses and individuals relying on their credit reports. “…we’re in a very digital world, and we have to ensure that the citizens information is well recorded. And it is a big focus of what we do,” Erick added.
Strategic Investments and Future Growth
CTOS’s strategic acquisition of a stake in RAM Ratings marks a significant step towards diversifying and strengthening its market position. Highlighting their plans, Erick said that they have launched a Digital Issuer Platform, ramped up their efforts on ESG Ratings and SME Credit Ratings, and have an ongoing quarterly publication of the RAM-CTOS Business Confidence Index (BCI). Additionally, they are looking into product expansion for corporates and SMEs.
These initiatives are part of CTOS’s broader strategy to leverage digital solutions and innovative approaches to enhance their product suite and optimise revenue streams. “We delivered another quarter of year-on-year growth across all customer segments and types of services. We maintain a positive outlook for the rest of the year, expanding our footprint for Digital Solutions and Comprehensive Portfolio Review and Analytics as the digital economy takes shape,” the Erick added.
CTOS’s growth ambitions extend beyond Malaysia, with significant potential identified in their international operations. “Our Group’s international operations in Indonesia and the Philippines under the brand name FinScore represent significant potential. With evident revenue growth in recent months, we anticipate even stronger performance moving forward in view of the growing pipeline and increasing customer conversion,” Erick said.
These dynamic markets present vibrant opportunities as CTOS’s alternative data platform addresses challenges and complements traditional credit scoring models.
Commitment to Excellence
Reflecting on the success of 2023, CTOS is determined to sustain its impressive performance. “We delivered another quarter of year-on-year growth across all customer segments and types of services, and maintained a positive outlook for the rest of the year,” Erick said.
CTOS said it plans to continue leveraging innovative approaches to optimise its current customer portfolio and enhance revenue streams while continuously developing and enhancing its product suite.
