CTOS can't set credit scores - High Court

Woman awarded RM250,000 after CTOS uses inaccurate credit score

11 Mar 2024 08:21pm
Photo for illustration purpose only. - FILE PIX
Photo for illustration purpose only. - FILE PIX

SHAH ALAM - In a significant judicial ruling today, the Kuala Lumpur High Court declared that CTOS Data Systems Sdn Bhd (CTOS) lacks the legal authority to independently generate credit scores for individuals, as reported by local media.

Judge Datuk Akhtar Tahir pointed out that the Credit Reporting Agencies Act 2010 (CRAA) does not grant CTOS the power to develop credit scores or establish their own scoring criteria for consumers.

Judge Datuk Akhtar highlighted that CTOS is permitted solely to serve as a repository of credit information for its subscribers.

"By attempting to calculate credit scores, the company has exceeded the bounds of its legislated role, venturing beyond its lawful mandate," he reportedly said.

Who is CTOS?

CTOS, a privately-operated entity, gathers financial and legal information from a variety of sources, including banks, financial institutions, and legal firms, to compile credit reports.

These reports are crucial tools used by financial entities to evaluate the creditworthiness and loan repayment potential of both individuals and companies.

Traditionally, CTOS has produced a credit score based on this data, assigning values between 300 and 850, where a higher score is indicative of stronger creditworthiness.

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Exploring the legal battle against CTOS

The backdrop to this court decision involves a lawsuit filed by a resort proprietor on Pulau Perhentian, who accused CTOS of negatively impacting her credit rating through the use of erroneous information, New Straits Times reported.

This purported misrepresentation led to significant personal and professional harm, including the denial of a car loan application in May 2019.

She contended that the flawed report from CTOS unfairly lowered her credit score, undermining her standing with financial institutions.

Despite her efforts to correct the errors in her credit report with CTOS, her requests were disregarded, and the inaccurate information remained uncorrected.

Akhtar said CTOS could have held back the information pending verification, or at least alerted the subscribers/applicants that a verification is underway, but instead they maintained the status quo.

As a consequence, CTOS has been ordered to compensate the complainant with RM200,000 in damages and an additional RM50,000 for legal expenses.