3 Credit reference files |
12. As we have seen, credit reference searches have
a growing importance in the credit application process. We therefore
reflected on the need for consumers' records to be accurate and
updated frequently. It was worrying that Mr Van der Meer suggested
that all was not well with the information being held by the credit
reference agencies. He noted that "anecdotally, from feedback
on our forums, a lot of consumers, when they check their credit
file, find issues with the quality of the data and then feel the
need to take action".
Mr Lewis highlighted how such errors on a credit reference file
could create a negative feedback loop with multiple searches:
You have got an error on your file and you apply
and you are then rejected because there is an error on your file.
You then make other applications and then later on find out that
there is an error, go back to fix the error, but now, when you
are applying, you get rejected because of all those searches that
you have done trying to make applications successfully, and that
is a vicious spiral which adds to this.
Mr Van der Meer noted that some consumers would not
check their own files, and that therefore "What we do not
know is how many consumers do not look at their credit file and
are impacted [by poor data quality]".
13. Industry witnesses were quick to defend data
quality. Mr Leenders told us that he thought "the vast majority
of data is very accurate".
He noted that, from the lenders and credit reference agencies'
perspectives, "it is in all our interests to make sure that
data is accurate".
Experian stated that "The quality of data at the credit reference
agencies is continually checked".
Mr Holbrook was also convinced that the data held by the credit
reference agencies was, in the main, correct:
Given the huge volumes of data which we are talking
about, hundreds of millions of records, it is inevitable that
some of it will be inaccurate. That will always be the case.
However, I have to say that our experience is that the overwhelming
majority of credit reference data is highly accurate. I am satisfied
that the agencies place very great store by ensuring that their
clients do adhere to high standards of accurate reporting of the
information that they hold. After all, it is in the agencies'
business interests to make sure it is recorded properly. We are
satisfied that they do.
However, he conceded that in a year the ICO received
"in the region of 100 or so genuine complaints about accuracy".
Mr Holbrook also confirmed that the ICO conducts no audits of
the quality of the information held by the credit reference agencies.
Instead, the ICO uses consumer complaints and regular meetings
with each of the agencies.
the importance of credit reference files to consumers who wish
to access credit, we believe the assurance of data quality is
paramount. We therefore recommend the ICO consider whether it
should seek further assurances that data quality and data correction
systems at credit reference agencies conform with the Data Protection
Act, potentially by independent audit. There are concerns that
credit applications rejected because of incorrect data may remain
on file and affect future credit scoring, because being rejected
for credit is seen as an indicator of risk. Accordingly, we also
recommend that the Information Commissioner's Office considers
whether it is fair for credit reference files to contain details
of consumer application searches made while credit reference files
were demonstrably incorrect.
15. Though there was a strong defence of the quality
of the data held by the CRAs by the industry, they admitted that
consumers would be advised to check their credit records. Experian
stated that "consumers are encouraged to check their credit
report before applying for credit to make sure it is correct and
up to date".
Ms Smith, of Callcredit Information Group, explained that people
may want to check their own credit records for a wider set of
reasons than just spotting mistakes:
people want to access their credit file to make
sure, certainly, what is on there is correct [
] They also
use it to alert any possibility of fraud, particularly if they
think that their credit card details or something else may have
been cloned or used by someone else.Just, basically, to keep an
eye on total financial management.
However statistics provided by Experian showed that
while 80% of people were aware of the existence of credit reference
agencies, only about 23% of people had, at some stage, sent for
their credit report.
16. The Data Protection Act 1998 provides for individuals
to access the data organisations hold about them.
Where the data controller is a credit reference agency, further
provisions on providing this data apply, one of which allows the
individual to "limit his request to personal data relevant
to his financial standing".
The cost of such a statutory credit report is currently set at
£2, though some
companies will provide similar information free in trial periods
of their other consumer products.
The Council of Mortgage Lenders suggested it could be wise to
remove the fee, arguing that "it does seem unfair that consumers
have to pay for access to their own data".
For the industry, Ms Key-Vice outlined the importance of the statutory
report, telling us that 1 in 6 people applied for a statutory
report rather than Experian's own consumer products.
When asked why consumers should be charged for their statutory
report, Ms Key-Vice told us that "Two pounds is quite a modest
fee". This price
also seemed reasonable to the Information Commissioner's Office.
Mr Holbrook told us that the £2 charge was "a fair administrative
it is fair that [the credit reference agencies] should
be able to cover their costs. They are already obliged to produce
this information at a fifth of the price that anybody else would
be entitled to charge for giving you your own personal information.
While a £2 fee for a consumer
to receive their statutory credit file may seem modest, given
that there are three potential providers of such reports, and
regular checking may be appropriate, costs may begin to add up.
We recommend that the OFT and the ICO consider again whether the
charge remains reasonable. In particular, given the key role credit
reports play, and the fact that relatively few consumers request
their credit reports, they should consider whether there is a
case for providing free access to increase take-up.
17. The ICO noted that "This is a complex and
technical area which consumers are likely to find confusing, not
least because of the array of different types of searches of their
credit files which may be made by organisations, and the different
ways they impact on a consumer's credit standing."
It is important that consumers have a clear understanding of their
own statutory credit reports. We raised the issue of whether or
not such statutory reports were clear. Mr Holbrook responded that:
I think, as ever, there is always room for improvement.
A standard statutory credit file is not the easiest thing to
readthere is no doubt about that. I do think there is an
onus on the agencies to make the information intelligible. I think
that they do go to some lengths to help people understand, but
there is no doubt that credit referencing is something that is
difficult to understand if you have had no previous involvement
with it. The ICO publishes a leaflet called Credit Explained
in which we try to shed some light on what credit referencing
is about and how consumers' data is used in the credit process.
We actually distribute far more of that publication than anything
else we produce.
He also acknowledged that some consumers needed help
in interpreting the statutory credit reports they received.
Experian pointed out though that "When a consumer obtains
their file from a credit reference agency they are also provided
with a detailed guide on the data and what to do if they want
to make any query about it. They have access to trained advisors
either by e-mail, post or telephone as part of the service".
complexity of the information presented in consumer credit reference
files, we recommend that the OFT and the ICO review the information
presented in statutory credit reports, and any supporting documentation
and assistance the credit reference agencies provide, and provide
guidance on how best to ensure consumers understand this.
21 Q 18 Back
Q 19 Back
Q 18 Back
Q 159 Back
Q 159 Back
Ev 74 Back
Q 205 Back
Q 207 Back
Q 226 Back
Qq 225, 227 Back
Ev 74 Back
Q 146 Back
Q 154 Back
Data Protection Act 1998, section 7 Back
Data Protection Act 1998, section 9 Back
The Data Protection (Subject Access) (Fees and Miscellaneous Provisions)
Regulations 2000 (SI 2000/191) Back
Q 124 Back
Ev 62 Back
Q 128 Back
Q 153 Back
Q 222 Back
Q 220 Back
Ev 38 Back
Q 210 Back
Q 211 Back
Ev 74 Back