A DATE FOR THE DIARY: CREDIT INDUSTRY TO IMPLEMENT THIRD PARTY DATA PROPOSALS BY 31 OCTOBER 2004
19 April 2004
Representatives of the credit industry1 have informed the Information Commissioner’s Office (ICO) that the industry is working to 31 October 2004 as the date for changes in the use of third party data2 in lending decisions involving individuals. By this date the vast majority of lenders will have the changes in place.
Proposals were originally put forward by the industry and discussed with the ICO in 2000-2001. Converting these proposals into practical working systems across the industry will mean that only information about the applicant for credit or other persons who have a financial link to the applicant will be used for consumer lending purposes. At present most credit applications involve lenders accessing the credit records of others in the applicant’s household (such as husbands, wives, partners, children, or parents). This means that the credit applicant has been able to see information relating to other family members when obtaining his or her own credit file.
“The credit industry has worked hard, with considerable investment, to ensure that it can implement the changes to the use of third party data“, confirmed George Wilkinson who chairs this working party of the credit industry. “The Credit Reference Agencies have already created the systems and lenders are implementing the changes to their application processes. The date will, therefore, be achieved by the vast majority of lenders.
“This initiative is a great demonstration of the credit industry addressing concerns raised by the Information Commissioner to achieve a solution that will benefit both consumers and the lending industry. Indeed we believe the changes in the use of third party data will be significant in the industry’s initiatives to ensure lending is conducted responsibly and fairly – particularly important when there is so much concern over consumer indebtedness.”
The Information Commissioner, Richard Thomas, said, ‘I welcome the industry’s setting of a firm and achievable date for the introduction of the third party proposals right across the industry. I recognise that many practical issues have had to be addressed and substantial investment made by the industry. But any companies in the credit industry still without a firm timetable for implementing the new requirements should reflect very carefully on their position. With a three year lead time and now with the firm industry set date before us, I will have little sympathy for any stragglers.
‘I share my predecessors’ concerns about the use of third party data in the lending process. I see the announcement of the 31 October 2004 date as another milestone in bringing credit industry practices closer to individuals’ legitimate expectations of privacy. The end is now in sight for the use of unrelated third party data in the consumer lending process.
‘The credit industry has responded positively to my call to set a firm date for the introduction of the new proposals. With that date set we can now look to work with the industry to raise individuals’ awareness of the changes in the systems and how these will directly affect them.’
Notes to Editors
1. The representatives of the credit industry are from the following trade associations:
a. British Bankers Association
b. Consumer Credit Trade Association
c. Council of Mortgage Lenders
d. Finance & Leasing Association
e. Mail Order Traders Association
The three consumer credit references agencies – Callcredit, Equifax and Experian - were also represented
2. Third Party Data’ – the changes. The Data Protection Act, 1998, defines ‘personal data’. Broadly, personal data means personal information relating to an identifiable living individual. ‘Third party data’ in the context of its use by the Consumer Credit Industry is personal information about another individual, typically husband or wife or partner but also adult children.
In outline the details of some of the changes to the use of third party data encompass the following aspects:
· There will no longer be an assumption made that there is a financial connection simply on the basis of a shared surname and address - Parents and children are no longer automatically assumed to be formally connected.
· When customers request a copy of their Credit File, the process will be amended so that an individual will only see their own credit data and not that of any financially connected ‘third party’.
· Individuals will be able to opt out of the automatic use of their financial partner’s data enabling them to be assessed in their own right.
· An 'alert process' using household data will be created, providing lenders with the ability to detect fraud.
3. The role of the Information Commissioner is to be the independent champion of public openness and personal privacy with various specific responsibilities set out in the Data Protection Act 1998, the Freedom of Information Act 2000 and other legislation.
4. This press release has been issued jointly by the Information Commissioner, the Trade Associations of the Consumer Credit Industry and the Credit Reference Agencies.For further media information please contact: Pritie Billimoria, Esther Kate Toye, Lucy Thom or Chris Smithat the Information Commissioner’s press office, on 0207 282 2960 or to speak to a representative from the credit industry please call Wendy Harrison, HSL on 020 8977 9132.
Ends
