A number of current burning issues in the consumer credit sector were explored in a recent podcast hosted by credit reference agency TransUnion. Software provider OneDoc, trade association UK Finance, Yorkshire Bank and free credit report provider Totally Money were all represented on the panel.
Firstly, it was noted that Application Programme Interface facilities have been implemented as fully as possible in many firms, and UK Finance hope it will assist firms with determining risk and setting prices.
The panel appeared to believe there would be no real benefit were there to be an initiative to introduce a single dashboard of bank accounts and loans, allowing a consumer to see all of their accounts in one place, similar to the new pension dashboard.
Lenders anticipate it will be necessary to obtain more data from customers in the future as regulatory scrutiny increases. Lending firms therefore need to persuade customers that the company can be trusted with their data. Carrying out regular Data Protection Impact Assessments (DPIAs) is vital in this respect.
DPIAs should be conducted whenever a firm:
- Introduces new products or services
- Implements a change to its procedures or practices
- Enters into a new service agreement with a third-party
- Adopts any form of new technology
- Decides to collect more personal data from its customers or other stakeholders
- Changes the way it will handle personal data
A DPIA must always assess the likely impact on individuals’ privacy. A DPIA may sometimes result in a firm deciding not to make the change it was considering, but if a firm does decide to proceed with the proposed change then it must also consider any additional measures it could take to mitigate the data protection risks associated with the change.
Next, it was mentioned that the Financial Conduct Authority is becoming concerned about consumers’ transient lives, for example there are 850,000 people in the UK who are on zero-hours contracts, according to the Trades Union Congress. Other UK consumers may also experience periods of shorter-term unstable employment. It may therefore be very important that a lender establishes just how likely it is that an applicant will continue to earn the amount of income they stated in their application.
Another point raised was that the current application model used by many lenders, i.e. just asking applicants what their income is, may lead to some people giving a figure that is too high. It was suggested that this might be because they don’t realise that they need to state their own personal income and not the full household income.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article