Credit bureaux curb bad debts

Two years ago, a key UAE law enforcement agency had estimated an "unacceptably high 60 per cent" of its time and effort went into addressing just one issue: that of bad debts.

Is the situation just the same today?

With a range of credit bureaux having established base here over the past few years, and awareness among the public spreading, a measure of control is gradually being imposed over the system, experts said.

But the problem still persists, and it remains sizeable, they acknowledged.

"The debt situation in the general region, including the UAE, is vast and almost impossible to quantify - and even here, the true level is invisible due to the enormous amounts simply written off and never reported anywhere," stated Christopher Broadbent of Decol Debt Collections.

He attributed the problem to the transient nature of the expatriate labour force.

"In terms of personal debt, we handle many of the credit card and personal (vehicle) loans in default, and are aware of a considerable problem mainly caused by the transient nature of the expatriate-driven workforce (expat)," he explained.

"As these individuals have no assets within the UAE to guarantee personal loans and credit facilities, it is extremely easy for them to simply leave the country and not return, thereby leaving the major institutions with a considerable bad debt portfolio."

But Internet-driven technology, and the increasing penetration levels being achieved in the country, are today helping combat the problem.

"While Decol has its roots in what has become a successful bad debt recovery operation, we created the Creditnet Bureau in 1997 to provide members credit information on thousands of companies and trading organisations, primarily within the UAE, but also in the region, and the world at large," the executive explained.

He pointed out members can, therefore, assess the creditworthiness of a potential client prior to handing over thousands of dirhams worth of stock and/or services.

"If a company has defaulted or bounced cheques on a bureau member, it is confidentially and anonymously reported to the bureau. If a client has sent us a bad debt for recovery action, that debtor is also reported."

The Internet affords 24x7 live access to the central database, assisting members in speedy determination of risk when faced with the decision of whether to grant credit or accept a company cheque.

Decol itself today has over 1,100 UAE-based clients and, through affiliations with Total Credit Management and American Collectors Association, is represented in 105 countries, and thus claims almost total global outreach.

The company itself acts on behalf of an estimated 600-800 international clients annually.

Broadbent noted it continues to have communications with the relevant authorities in both the Dubai Chamber of Commerce and Industry and the Economic Department.

On whether September 11 caused any fallout on credit agencies - particularly with regard to privacy issues - he pointed out: "Our services can contribute to internal stability through the weeding out of establishments financially detrimental to the economic well-being of a country. It is our goal to bring profitable and sound companies together in a financially viable climate within the (online) Creditnet Bureau."

He believed the objective of universal membership is attainable, in time, and beneficial to the economic long-range plan of any country. But the issue of invasion of privacy does not really come into the picture: "Naturally, one of our strictest policies is that of total confidentiality."

Going forward, the company eyes physical expansion into Oman and Qatar, while enhancing its existing web site with future links relating to law, practices, policies and allied issues.