Credit card companies to share more customer information
Credit card companies will share information about their customers and compile data on their behaviour, the industry peak body has announced.
Credit card companies to share more customer information
Lenders will now be able to see the amount of a customer’s previous payments and whether or not these were the minimum payment.”
The Association for Payment Clearing Services (APACS) said the radical move would provide early warning of customers at risk of financial difficulty and allow the industry to offer them advice before they got into trouble.
However, the new data sharing scheme will also give lenders greater scope to decline applications.
Lifting the lid on private information
Capital One, Barclaycard, GE Money, HBOS and MBNA have already signed up to share customer data. It is expected that other companies will also soon be involved.
Up until now, the information credit card companies have had access to has been limited to a customer's other credit balances, limits and whether or not payments were up to date.
Lenders will now be able to see the amount of a customer’s previous payments and whether or not these were the minimum payment. Companies other than your own credit card provider will also discover whether or not you are clearing your balance.
Other information being shared includes changes to credit limits, the frequency of cash transactions and details of any promotional deals signed up to.
The data is to be shared through credit reference agencies, such as Experian and Equifax.
APACS said the scheme was intended give providers a clearer indication of how customers were using their accounts and therefore how much they could afford to repay.
Paul Rodford, head of card payments at APACS, said: "Our announcement today is not a silver bullet for tackling over-indebtedness, but it is a significant step forward in the card industry’s ongoing commitment to responsible lending.
"It has taken a great deal of work and investment to achieve and should bring real benefits for the consumer.”
He continued: “The holy grail for credit card companies is to have access to data that could predict a customer’s future ability to repay. Data sharing is well established in the UK, and has evolved over many years.”
“This new data relates to how customers manage their accounts and will enable lenders to intervene, at an earlier stage, for those showing signs of debt stress and ensuring that those already struggling are not given further credit.”
The move has been supported by the credit card industry and the credit reference agencies. But there are fears that greater data sharing could lead to aggressive marketing and predatory lending to the most financially vulnerable.
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