Four of the UK's largest High Street banks have agreed to
share customers' current account details to prevent them
from getting into financial difficulty. HBOS, HSBC, Lloyds
TSB and the Royal Bank of Scotland have teamed up with credit
reference service Callcredit to launch the initiative to
tackle over-indebtedness.
The lenders will share their customers' income data with
the banks, along with current account information. The move
will allow banks to form better decisions about whether
an individual will be able to repay a loan or credit card.
The credit reference agency will provide the participants
with details of customers who are severely overindebted
and in need of debt advice. It will also provide daily alerts
of customers whose changing levels of indebtedness may be
a cause for concern.
Previously, lenders have focussed on how well a consumer
has managed debt repayments and how much credit they can
have on existing deals.
Callcredit managing director John Andrew said: 'The Government
wants more consumer protection for borrowers and the lenders
want to provide a better service to their customers.
'It is true that only a small percentage of customers
are overindebted and our initiative provides additional
opportunities to offer these customers appropriate advice
and support.'
The scheme has been in planning for two years and it is
expected more banks will join it as it progresses.
Lenders have taken steps to tighten up on who they lend
to in recent months after several suffered a rising level
of customers with bad debts.
Barclaycard recently said it has upped the proportion
of applicants it rejects. It was part of a scheme, along
with Egg, Abbey and the Co-Operative Bank, launched last
year to expand the level of customer information they
supply to the main credit reference agencies.
Banks share negative data, which shows if a customer has
missed payments. However, it is difficult to judge how
indebted a customer is on that information alone.
UK consumers currently owe £1.2 trillion, including
mortgages, and bankruptcy figures show the number of individuals
experiencing money difficulties is soaring.
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