UK Card Issuers to Share Behavioral Data re: Credit Risk

All APACS members have committed to this initiative. Starting this December, five credit card issuers - Barclaycard, Capital One, GE Money, HBOS and MBNA - will be ready to share the data and others will then follow in accordance with their specific IT plans. The data will be shared to help to identify and assist people who may be starting to experience financial difficulties. The new initiative will also help the industry to fulfil its commitment to responsible lending, as set out in the revised Banking Code, which came into effect in March this year.

Traditionally, shared data for credit cards has included the customer's balance, credit limit and whether payments are up to date. The new data will now also include the amount of their last payment, and whether this was equivalent to the minimum payment; changes to credit limits; the extent to which they withdraw cash on their account and if the customer is signed up to any promotional deals. This last category is particularly important because it makes it possible for 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.

Data is shared through the credit reference agencies and will enable lenders to have a clearer picture of how customers use their credit cards, so that they can lend accordingly- thus supporting the industry's long-standing commitment to responsible lending.

Paul Rodford, APACS' Head of Card Payments, said: “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.

"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.”

Peter Tutton, Senior Policy Officer, Citizens Advice, comments: "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.”

To coincide with this announcement and explain how behavioural data will now appear on a customer’s credit report, APACS has revised its consumer guide, Your Credit Record, which sets out the information held on a credit report by the credit reference agencies and explains why it is important for consumers. The guide can be downloaded from here: http://www.apacs.org.uk/resources_publications/documents/Yourcreditrecord-November2008.pdf