By Dan Ilett, 2 December 2005 16:15
NEWS
Four major credit card issuers are planning to share cardholder information with each other and credit reference agencies.
Abbey, Barclaycard, the Co-operative Bank and Egg have said they will share cardholders' "behavioural" data in a move they claim will "help identify customers getting into financial difficulty".
The companies said they are looking to identify changes in circumstances that suggest an individual is experiencing problems with personal debt. The data will also be shared with credit reference agencies Callcredit, Experian and Equifax.
Data that will be shared includes the amount spent and repaid on a credit card each month, changes to credit limits, bounced cheques and spending patterns.
In a statement, Barclaycard CEO Gary Hoffman said: "This move will improve our ability to help customers by making better lending decisions. Whether it's a customer applying for a card or asking for an increased credit limit, the better the information we have access to, the better chance we have of getting the decision right."
There are laws around how customer data should be used, particularly in ensuring shared data is not used for marketing purposes. But the banking industry has shared data about customers who have fallen behind on payments since the late 1980s.
Today the Information Commissioner's Office, which regulates how consumer and business data is used by companies, said it is investigating exactly what the banks are trying to do.
A spokesman for the department told silicon.com: "We've been in touch with the banks about this and we are currently looking into it."
Clive Davies, a partner at technology law firm Olswang, said there could be some sticking points in the plan.
He said: "I think there may be confidentiality issues. When you enter into a credit card agreement you probably sign something where you give consent for data to be used with that company. What you probably don't do is give consent to share that information and let companies check you as big brother would to see if you have too much credit."
According to Barclaycard, MBNA and Nationwide are also supporting the scheme.
Comments
There are 4 comments. Join the discussion
1. Geoffrey Darnton
..and is it setting up a cartel? I have often wondered if the sharing of data that already takes place via the credit reference agencies is itself assisting the dramatic growth in debt because it enables companies to lend 'up to the hilt' and beyond - presumably the credit companies would like to lend the maximum possible with some chance that they will get it back if something goes wrong. This should also be referred to the Office of Fair Trading to see if the credit companies + credit reference agencies = cartel. The levels of bank profitability already suggest something seriously wrong with competitiveness in the UK. One reason why such sharing of data may be unlawful includes the likelihood that it is excessive for the performance of the specific contract the borrower has entered into.
2. Julian Nicholls
When I heard this last week, I thought that it was a good idea, but that it was going to run into Data Protection problems.
The other thing is that people will just apply for different cards that don't share their data if they really want to get themselves into the trouble I did!
3. Steven James
I don't like the "Big Brother/Nanny State" attitude that has developed in this country, regardless of the reasons given by so called experts. Sharing cardholders data with so-called "other financial institutions" is the beginning of opening the floodgates to every form of credit provider whether personal or business. If the government wants to get serious and really wants to stop bad debts etc, (as the banks apparently want to) REGULATE the BANKING INDUSTRY. When I opened my account going over my overdraft was £5. Now it's £20. per day it is in the red. £35 fine for not having the funds available for a direct debit (even when the drawer doesn't charge the bank) is getting into the ridiculous GREED circle. Stop people accumulating debt by unnecessary bank charges. REGULATE the BANKS!!!
4. anonymous
'Big Brother' keeps growing by being marketed as a means to 'help' the consumer or citizen. Most of us are mature and responsible adults who don't need corporate or government collaboration to exploit our private data.
All the banks want to do is insure they are not exposed to the cost and loss of collecting repayments on credit cards when people mis-use them. You can have as many credit cards as you like if you can keep up the monthly repayments - no matter how you go about it (they don't want to know that). It is a commercial decision - not a paternalistic one. So, let's get real.