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Credit card providers to share debt data

Data sharing to help over-indebted consumers

APACS, the UK payments association, has announced that credit card companies are to share ‘behavioural data’ on customers’ accounts from this month. Initially there will be five credit card issuers in the scheme Barclaycard, Capital One, GE Money, Halifax Bank of Scotland (HBOS) and MBNA – with more expected to follow soon.

The expansion of data sharing is intended to identify and help consumers who are starting to experience financial difficulties.

Previously the data shared between credit card providers has included the customer’s current balance, the credit limit on the card and whether payments are up to date.

Managing finances

The new data will also include:

  • the amount of the consumer’s last payment
  • whether this was equivalent to the minimum payment
  • changes to credit limits
  • the extent to which consumers withdraw cash on their account
  • if the customer is signed up to any promotional deals. (This category allows a lender to distinguish between someone only ever paying the minimum repayment because they may be in financial difficulty, from someone who has the means to repay, but chooses not to because of a deal they have obtained).

The data is to be shared through the credit reference agencies (Callcredit, Equifax, and Experian) and is designed to give lenders a clearer picture of how customers use their credit cards, so that they can lend responsibly.

Peter Tutton, Senior Policy Officer of Citizens Advice, commented, ‘Citizens Advice welcomes the news that this important enhancement to data sharing is now launched. We believe that it is increasingly important that customers who are showing signs of experiencing debt stress are identified at an early stage, so that appropriate help can be provided. It is now imperative that lenders make full use of this additional information as part of an ongoing commitment to responsible lending.’

Graham Lund, Managing Director of Callcredit added, ‘The additional data sharing is an important step towards combating over-indebtedness. Now more than ever lenders are looking for greater insight into their customer’s levels of debt stress and this initiative goes further to demonstrate the industry’s commitment to responsible lending.’

Which? debt expert, Martyn Saville, said, ‘We welcome any initiative that helps card providers to identify the signs that debt is getting out of hand and to take positive, supportive action. The new system should not, however, be used by credit card providers to identify new sales opportunities.’

For more detail, see the Which? guide to credit reference agencies and our advice on dealing with debt.

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