Credit reference agency Ctos was recently subjected to severe criticism as consumers, businessmen and politicians felt that its database on the credit history of an individual was not accurate and their privacy was infringed.

The Association of Banks in Malaysia (ABM) has now said that they will first require consent from a loan applicant before a credit check is carried out with Ctos although we were all waiting for Bank Negara to issue such a directive.

This would mean that these banks will still rely on Ctos' unreliable database. By this, they have merely provided an artificial solution to the whole problem. If they are still going to rely on this questionable database, then what was all the fuss on unreliable credit referencing about?

They would still be relying on an unreliable database but this time 'with consent'. What makes one think that by refusing to give consent, an individual's loan application would still be processed fairly?

The ideal solution to this problem is to suspend the operations of credit referencing agencies until regulations are effectively put in place. With this done, the banks can continue to rely on whatever database but consumers would not be unfairly penalised.

The writer is director, National Consumer Complaints Center (NCCC).