Letter to the Chairman of the Committee
from Chief Executive Skipton Building Society
You are quoted as saying that you will take
the banks to task and that with current information technology
it should be possible for the risk of such situations to be reduced.
This is correct, new technology can negate such
extreme levels of over indebtedness once lenders avail themselves
of this new technology and work together in sharing information
so that consumers with debt profiles like Mr Rawson are identified
long before extremes in over indebtedness are reached.
One of our subsidiary companies, Callcredit,
the Consumer Credit Reference Agency, has been working for some
time now on just such a solution with the major lenders. Using
new technology that enables Callcredit to monitor all of a lender's
customers daily, they are able to identify early a customer moving
into over indebtedness. This process alerts lenders immediately
if any of their customers show signs of credit stress. It will
also enable lenders to ensure that new loans are not granted to
such consumers.
We are working with the industry to implement
this initiative as early as January 2005. Our experience confirms
that consumer credit granters regard this problem as a very high
priority.
However additional action is required also.
Current legislation precludes lenders from sharing
all of their data. Many accounts opened some years ago have no
customer consent to share data with credit reference agencies.
The Information Commissioner currently does not allow lenders
to share data unless such consent exists.
Unfortunately, until lenders have a clear and
comprehensive view of a consumer's borrowing, over committed consumers
will continue to occur, no matter how good our technology.
We strongly recommend that either legislation
is quickly passed so that for historical credit services, lenders
can share information without consent or the Information Commissioner
is encouraged to take a more pragmatic view for the public good.
We therefore strongly support you writing to
the Information Commissioner asking him to ensure that this full
sharing of data would not be a breach of the Data Protection Act.
If you require further information on the above
solutions, consumer indebtedness or the restriction on lenders
sharing data please do not hesitate to contact me.
In summary I must repeat the problem is being
treated as high priority for the lending industry, but we also
need movement from the Information Commissioner to enable full
sharing of data.
11 October 2004
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