An investigation into plans on how to share credit data across Europe has been published and it details a series of proposals to help improve credit checks.
The European Commission set up the Expert Group on Credit Histories (EGCH) as a means to identify and overcome the obstacles in sharing credit data across Europe and the ECFH’s report has revealed it is AGAINST the creation of a single pan-European credit register.
It is thought that if the move had gone ahead, the potential cost to UK banks could have been in the hundreds of millions of pounds each. Given the fact that UK banks are ahead of a lot of their European counterparts in credit data management, the report seems to have some valid points, particularly including the creation of such a register does not seem to be a realistic or effective option.
In a crucial move for the credit industry to promote cross-border responsible lending, the EGCH has proposed that access to credit data for the purpose of credit checks should be possible throughout the credit lifecycle and after the expiry of the credit agreement. This, the report states, would serve the purpose of risk assessment, account management, debt collection, debt recovery, fraud prevention and money laundering prevention.
The preliminary report, entitled Access to Credit Histories, recommends that creditors be given free choice between all access models available to them, depending on the business case and data protection rules. The EGCH said the indirect access model may be the most suitable, as a first step in generating a cross-border market.
In a significant move the group has also recommended that the Consumer Credit Directive could be used to ensure that foreign creditors get the same level of access to credit data as local creditors in that country, without barriers.
The report also recommends that national data protection authorities work towards more harmonization in the interpretation of data protection rules and in their practices in order to facilitate the process of cross-border credit data exchange.
The proposals also state that the use of data across borders should comply with the national rules of the country from where it is accessed. The EGCH has also recommended that action be taken to ensure a level of convergence, at cross-border level, over consumers’ access conditions.
