Credit Reporting Foundations Lessons from Europe.

Credit ReportingFoundations

Lessons from Europe

©2015 • Name Surname • day/month/year2

The ideal situation

It is fascinating to being able to decide what is the best model on which to found a credit bureau. Should there be a private bureau, a public registry, or both? Should data contribution be mandatory? What about inquiry? Do private bureaus need to be regulated and if so by whom? Who should have access to bureau data? What type of consent, if any, is needed?

Some of these questions often lead to philosophical debates at best, and soccer hooliganism at worst

Today I have the luxury to stand away from the debate and simply bring some experiences on how these debates were settled in different countries

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European Landscape

Europe presents a fairly diversified landscape when it comes to credit bureaus, in terms of ownership structure, private bureau vs public registry, profit vs non profit, member structure, purpose for accessing, information handled and regulatory/supervision/oversight environment

Most European bureaus participate in ACCIS, the Association of Consumer Credit Information Suppliers established in Dublin in 1990, and currently bringing together 46 consumer credit reference agencies in 28 European countries and 6 associate members from all other continents.

I will use ACCIS data to concentrate on the regulatory environment differrences


Private Bureau or Public Registry? Industry or Independent owned?

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Wide diversity in ownership structures: 32% are owned by lender associations or banks, 36% are subsidiaries of other organizations and 21% are privately owned.

Source: ACCIS Survey 2011 2012

Profit / Non Profit

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Mandatory or Voluntary Contribution?

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In about 29% of cases, data sharing is required by regulation, and a further 19% is partially required

Consent Needed?

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59% of responders stated that all/part of their data was shared on the basis of consent.

Consent Opt Out Allowed?

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64% are able to opt out of this data being shared and 43% stated the consumer could withdraw this consent at a

later date

Permissable Purpose?

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55% of responders stated all or part of their data was shared on the basis of legitimate interests of the data

processor and that the consumer is notified that data will be shared if they proceed with the product.

Permissable Purpose and Who Can Access?

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0 5 10 15 20 25

Consultants

Brokers

Government departments

Utilities

Debt collectors

Telcoms

Enforcement division

Mortgage providers

Insurance companies

Retailers

Banks

Credit applications

Identity checking

Debtor tracing

Fraud prevention and detection

Staff vetting

Different Management of Positive and Negative Data Requirements

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The basis for sharing, whether consent, legitimate interest or otherwise, does vary depending on the data, whether positive or

negative, for 36% of credit bureaux. In addition to the legislation considered here, 43% of responders

stated there were other laws or regulation that restricts data sharing


Conclusion - The ideal situation I promised to stay out of the fray, but I do have an opinion

There is no ideal situation. Different situations can work with different combinations of underlying foundations, and also depend on local values and realities.

Not all countries must have public registries, not all countries must have licensed bureaus, not all countries require consent

The right balance must be struck between stakeholder rights, local values, and the level of available financial infrastructure

Incentives to share pooled and public data, together with oversight focused on guaranteeing quality and value added lenders and borrowers are the good practices that accelerate the credit reporting infrastructure maturity in a country. On the contrary, a difficult access to data and oversight focused on processes combine to slow down such growth


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Credit Reporting Foundations Lessons from Europe.

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