Credit card firms urged to share customer info

Credit card companies were urged today to share more information on customers in a bid to stop people racking up unmanageable debt.

Chairman of the British Treasury Select Committee John McFall has written to six major credit card lenders in the country urging them to share more data on borrowers to promote responsible lending.

He said the committee had two major concerns about the negative effect flowing from the current lack of data sharing.

He said: “It hampers responsible lending. Lenders may be unable to access accurately a consumer's ability to take on additional debt.

“A consumer making the minimum repayments across a number of different credit cards may be struggling with debt but would still have a good credit rating.”

He also said the lack of data sharing could be preventing competition in the area of risk-based pricing.

Many credit card companies charge different interest rates to people according to their credit rating and their likely risk of defaulting on the debt.

But Mr McFall said the failure of lenders to share information may prevent customers from being eligible for a lower rate.

He added that there may be legislative barriers preventing a fuller sharing of information, but urged lenders to look at the issue.

In his letter to Barclays, HBOS, HSBC, MBNA, Royal Bank of Scotland and Lloyds TSB, he also asked for an update on what the banks had done about a number of concerns raised during the committee’s investigation into credit card lending.

This included the introduction of summary boxes, outlining the cost and charges of cards to help consumers shop around, the different methods used of calculating interest, which make it hard for consumers to compare rates, and the information that appears on monthly statements.

Barclaycard, the UK's biggest credit card lender, welcomed Mr McFall's letter.

A spokesman said: “We already share everything we can, whether it’s positive or negative.

“We would support what John McFall is talking about, we think the more information shared the better for everybody.”

He said some lenders currently only passed on negative information about customers, for example if they missed a repayment or defaulted on a debt, but this meant there is no information available on people who have cards or loans but always made the minimum repayment on time.

He added that Barclaycard was only able to share information on customers who took cards out after 1992 because before that people were not asked if their data could be shared when they signed up, and this issue would need to be addressed to allow further data sharing.

A spokesman for Halifax, part of HBOS, said: “We already look at someone’s current outgoings as part of their application for a credit card and we will continue to work with the Treasury Select Committee on data sharing and the other issues raised.”

The Association of Payment Clearing Services in England, which represents credit card lenders, said its members would provide a full response to the issues raised by Mr McFall before the deadline of September 29.

Mr McFall said the committee was looking for further progress on these issues, as well as other areas it has expressed concern about, including unsolicited increases in credit limits, the sale of payment protection insurance and credit card cheques.