Good afternoon / 08.09.08
Corporate Solutions
Corporate Solutions
The Information Commissioners Office (ICO) has had concerns for a number of years relating to the credit industry's use of third party data i.e. data relating to anyone other than the data subject. The use of third party data assumed a financial connection on the basis of a shared surname and current or previous address. This caused many consumers inconvenience and embarrassment and raised a number of complaints to the Commissioners Office. The changes brought about by the new requirements under Third Party to the processing of data meant that parents and their adult children would no longer be automatically assumed to be financially connected. This has been a great move forward for the credit industry in that it has ensured fairer processing and privacy of third party information.
The changes to the use of third party data reinforced consumers' rights under the Data Protection Act 1998 and the Human Rights Act 1998 and, through a number of specific changes, helped to improve data quality within the industry. The ICO were regularly updated with recommendations proposed by the working party set up to appraise the use of third party data.
The working party, in consultation with the ICO, then produced a Business Requirements Specification (BRS) document, which outlined the future use of third party data (TPD).
There have been substantial changes made to Callcredit's systems to accommodate the processing of these new requirements. This has affected the processing of credit applications/credit risk screening, ID verification and fraud prevention and has had impact on customer account management and the data supply to credit reference agencies. The biggest impact for most consumers has been the change to the data returned on their consumer credit file.
From its conception in 2001 Callcredit was first party data compliant, with all our credit files only containing data relating to the data subject. The TPD requirements led to further system enhancements to ensure that our system fully complied with the BRS.
Callcredit's TPD system offers the following features in line with the Third Party Data Business Requirements.
When a credit application is made the consumer may be given the option to opt-in or opt-out. Our clients will then have the ability to select either option.
The purpose of alerts is to provide the lender with an element of protection against fraudulent applications for credit, in that if a consumer asked to be assessed independently the lender is made aware of other relevant data, which may effect their lending decision. There are two different types of Alerts –Decision and Review.
HHO is a functionality, which provides the lender with summarised data relating to same family individuals i.e. all those with the same surname, or aliases, who live at the addresses declared by the applicant.
It is utilised when the lender has minimal information on the applicant upon which to base the lending decision, sometimes referred to as a 'thin file'. This functionality can only be used positively and if the applicant has opted-in, i.e. to change the applicant from a 'refer' to an 'accept'.
Information will be returned on same family individuals regardless of whether or not a financial association exists between them and the applicant. However, if a disassociation exists between the applicant and the HHO individual then their data is not included in the report.
The public data elements returned on a HHO credit report include confirmation of the number of County Court Judgments within the household, how many of these are satisfied and whether or not the individual is currently insolvent.
For those lenders who are members of SHARE (Callcredit's closed user group) SHARE data elements are also returned as part of the HHO functionality. This includes the number of SHARE accounts within the household, how many of these are in default and the worst payment status in the last 12 months.
A transient association is a temporary association between two individuals the example often used is two students who purchase a fridge together whilst at university. To this end, when a joint application is being made there is a flag which can be set to indicate that the association is transient. If this flag is selected then details of the credit agreement will appear on the applicants' credit reports individually but an association will not be created or displayed.
When deciding upon which features of the Third Party Data system to use, our clients would need to assess the amount of data required to make a responsible lending decision, based upon the type of product they offer and their application processing procedures.
The TPD requirements also mean that clients need to review and update their consent clauses and fair processing notices to allow the applicant the choice of opt-in and opt-out and to ensure that the applicant is made aware of how their data will be used within the third party data requirements.
Consumers may no longer be able to see all the data that was used to assess their application on their own credit files. This is dependant on the level of data the lender has chosen whilst making the credit decision i.e. opt-in/opt-out, Alert or Household Override. It is important that all lenders now facilitate these changes by ensuring that they do not discuss data relating to partners or same family members with the consumer but should encourage the consumer to ask their partners or same family members to get a copy of their own credit file from the credit reference agency used.
