House of Lords
Thursday, 2nd May 2002.
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.
Credit Reference Agencies
Lord Higgins asked Her Majesty's Government:
- What steps have been taken by the Information Commissioner and credit agencies to ensure that, when an individual applies for credit, such agencies reveal information concerning that individual alone, and that data on others in the same family or at the same address remain confidential.
The Parliamentary Secretary, Lord Chancellor's Department (Baroness Scotland of Asthal): My Lords, in response to concerns expressed by the commissioner, the industry is implementing proposals for restricting the use of third party data in the lending process. The main proposals are that financial connections will not be assumed solely on the basis of shared surnames and addresses; that parents and children will no longer automatically be assumed to be financially connected; and that individuals asking to see their credit files will normally receive only their own data.
Lord Higgins: My Lords, as the Data Protection Act was passed as long ago as 1998, does the Minister agree that the practice of credit rating agencies releasing personal financial information to other family members and to those thought to have a financial connection has gone on far too long? How much longer does she expect such a practice to continue? Surely, it should stop straightaway.
Secondly, will the Government consider the situation whereby the provision of inadequate information by credit rating agencies to lenders may result in wealthy and, more importantly, poor people being denied credit because they do not have much or any credit history?
Baroness Scotland of Asthal: My Lords, the new provisions will address the issues outlined by the noble Lord. The commissioner, as the noble Lord will know, did not have the ability to act independently in relation to this matter until the changes that took place in 1998. Before that time, she was bound by a tribunal decision that did not allow her to take action. The industry is working with the commission. There are three main agencies. One is already compliant with the proposals that I have outlined; the second is likely to be compliant by June; and the progress of the third credit reference agency is being carefully monitored.
On the noble Lord's second point, to whom such agencies lend their money will always be a matter of commercial judgment. There has to be sound practice
in that regard and one has to keep a watchful eye in relation to those matters. One cannot improperly interfere with what is, in essence, a commercial judgment.
Lord Borrie: My Lords, does the Minister agree that it is extremely undesirable for anyone to be over-committed with debt? If someone who is not credit-worthy lives in a household and applies for credit in the name of one of the other members of the household, and if the credit rating agency does not have information about the other members, what is to stop the non-credit-worthy person intercepting the replies and obtaining credit when he or she is completely non-credit-worthy?
Baroness Scotland of Asthal: My Lords, I understand what the noble Lord says. What he has just described is fraud. We have laws that are perfectly capable of dealing with people who so act. The important point about the change is that it is unjust for the sins of the father to be visited on the son or vice versa. Each of us has an entitlement to be judged on what we do or do not do as opposed to that which is done by a member of our family.
Lord Rogan: My Lords, is the Minister satisfied that credit agencies now recognise BFPO addresses as permanent addresses for the purposes of assessing the credit worthiness of the members of our Armed Forces while they are serving abroad? If not, will she make representation to the credit rating agencies to rectify that anomaly?
Baroness Scotland of Asthal: My Lords, I am very much aware of the concern raised by the noble Lord. Quite often our Armed Forces serve abroad and are put at a disadvantage. Of course, it is a matter for the commissioner but I shall take it into account and undertake to write to the noble Lord in relation to it.
Baroness Buscombe: My Lords, the Minister will know that it is extremely difficult to open a bank account if one does not have a credit rating. In that case, how will poor people open a bank account if they do not have a credit rating? What effect will that have on the Government's proposal for universal bank accounts?
Baroness Scotland of Asthal: My Lords, I understand the difficulties to which the noble Baroness refers. It will be a matter for those who lend money to decide the basis on which that money is to be lent. Another problem is that of people undertaking commitments in relation to loans that they simply cannot afford. A working party has been set up to look at the issue of over-indebtedness. I am sure that that will be one of the issues that the working party may want to encompass.
Lord McNally: My Lords, will the Minister draw the attention of that working party to the advertising on commercial television, usually in the afternoons, by
companies that put a heavy emphasis on phrases such as "No credit rating will be asked for", "Your loan will be automatic" and so on? Such advertisements appear to be aimed at vulnerable people who have already experienced indebtedness and will get deeper into debt as a result of that kind of aggressive advertising.
Baroness Scotland of Asthal: My Lords, I understand the concern rightly expressed by the noble Lord. In setting up the task force to explore the causes and effects of over-indebtedness, which was set up in October 2000, that was one of the issues to be considered. The task force reported in April 2001. The main proposals were as follows: first, that the Department of Trade and Industry should commission research into the causes, effect and extent of consumer over-indebtedness and identify solutions. The department expects to publish the outcome of that research later this year. Secondly, the DTI should set up a working group to look at credit marketing techniques, to improve credit information to consumers and to look at the way payment protection insurance is sold. Those groups have now been established. Thirdly, lenders should improve their data sharing and the information they give when they turn down applications, and should stop offering unchecked instant credit, to which the noble Lord referred. Already one major trade association has banned unchecked instant credit. So we are addressing this problem and are doing so with a great deal of energy.
Baroness Crawley: My Lords, can my noble friend say how she thinks the community legal service partnerships can assist in what is the central issue here; that is, over-indebtedness?
Baroness Scotland of Asthal: My Lords, we have tried to bring people together in relation to the provision of advice and legal services. Indebtedness is one of the issues to which many of the community legal service partnerships are rightly addressing their minds.
Five-pound Banknotes: Supply
3.15 p.m.
Lord Oakeshott of Seagrove Bay asked Her Majesty's Government:
- Whether they will encourage banks in England and Wales to make more £5 notes available in cash machines and at branch counters.
Lord McIntosh of Haringey: My Lords, the production, issue and distribution of bank notes is the responsibility of the Bank of England. It is for the Bank to ensure that sufficient £5 notes are in circulation and that they are of suitable quality. Some banks have made a commercial decision to limit their stock of £5 notes and not to use them in cash machines for reasons of cost effectiveness and demand.
However, the Bank is working with high street banks, the Post Office and key retailers to improve the quantity and quality of £5 notes in circulation.
Lord Oakeshott of Seagrove Bay: My Lords, I thank the Minister for that reply. Does he realise, and do the Government accept, that people want more fivers rather than pockets full of coins or large, inconvenient notes? The Bank of England is having to work through Marks & Spencer and Consignia because the banks are being extremely unhelpful in making £5 notes available. It is quite possible, as Northern Ireland shows, to make available £5 notes, but it is extremely difficult to get them from tills. Leading retailers have been conducting a survey. When will the banks begin to pay attention to the needs of their customers so we do not all have to make do with a few filthy fivers because they are not doing their job properly?
Lord McIntosh of Haringey: My Lords, fivers are filthy not because there are not enough of them, but because people shove them in their pockets with their change. They only last nine months; £10 and £20 notes last two to three years. Fivers last for much less time. However, the Bank of England is introducing new £5 notes on 21st May with the portrait of Elizabeth Fry instead of George Stephenson. I understand that they will be considerably tougher.
Cash machines normally have only two cassettes and it is the commercial judgment of the banks that, except in some cases like university towns, their customers want £10 and £20 notes rather than £5 notes.
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