British government to remove all barriers to banks sharing personal data
The Telegraph reports that the government is planning to remove all the barriers that prevent the sharing of personal data between banks and credit reference agencies:
Last year’s inquiry by the Treasury Select Committee into credit card charges specifically raised the question of over-indebtedness, and called on banks to increase the amount of data they shared on consumers, to prevent those with big debts taking out ever more loans and plastic.
Credit reference agencies have existed for more than a century in the US but arrived in the UK about three decades ago, at a time when banks were becoming more generous with credit cards and other accounts, but wanted to weed out problem debtors. Today there are three agencies, Experian, Equifax and CallCredit which hold a range of data about who we are, where we live, how much we earn and who we bank and borrow with.
Initially, they could only hold information on customers who failed to pay their debts on time, but more recently they were allowed to include data on good account holders as well as bad. However, many banks were reluctant to trade details of their good customers, for fear of losing them to competitors, so they restricted their data sharing to defaulters.
This changed over the past year or so, as political pressure mounted in the face of alarming stories of customers clocking up tens of thousands of pounds of debt, after acquiring a whole pack of credit cards. If people couldn’t be trusted to borrow responsibly, the lobby grew demanding that banks protect rogue consumers from themselves.
Now all the big lenders and banks pass full details of 350 million credit and current accounts opened since the late 1990s to the three agencies, but they do so with our consent. Roughly a decade ago, institutions introduced a clause into their standard terms asking for our permission to share our personal details with the agencies. Anyone who refused to give permission would have been turned down for the loan or account.
However, there are a further 40m accounts opened before banks changed their terms and conditions where customers have not been asked if they are happy for their details to be disclosed to third parties for credit checking purposes. These are called “non-consensual” accounts, and data relating to them cannot currently be shared. It is these accounts which the Government now wants to lift the blackout on. The Department of Trade and Industry is due to report in May on how this will be done.
HBOS’s head of risk, Nick Robinson, says: “The whole business of credit scoring and credit reference agencies is a bit of a dark art, but we want to be responsible lenders, and it is very difficult to assess someone’s levels of debt, unless we have access to all the financial information we can get,” he says. “We understand that many people will not be comfortable with the prospect of their financial data being shared without their consent. But we have tried sending out forms asking for permission and that doesn’t work. It would seem we have to look at some other “non-consensual” arrangement, which is what the DTI is examining now.” (emphasis added to Telegraph article)
Note the attitude indicated at the end of this quotation: getting consent did not work, so now we will do it without consent! (How dare these awkward customers protect their privacy?!) So much for financial confidentiality. Our bank accounts will soon all be open books.