NEWS...
DBSG Lobbies for Earlier Access
A paper has been submitted to the Steering Committee on Reciprocity (SCOR) advocating that debt buyers are allowed access to credit records on an anonymised basis both prior to and during the purchase process.
As many already know, SCOR oversees which organisations are allowed access to personal credit data – as well as how and when they can use it. The committee itself is made up of representatives from several key players including the Council of Mortgage Lenders, the British Bankers Association, the Finance and Leasing Association, the Mail Order Trade Association and the Consumer Credit Trade Association, together with representatives from the credit reference agencies – and of course the DBSG and the CSA.
Debt buyers were granted access to consumers' credit records in September 2007. However, access is currently not permitted until after a portfolio has been purchased.
Current thinking would suggest, by giving buyers an opportunity to gain a greater understanding of portfolios prior to purchase it will enable them to make better pricing decisions. In turn this will ultimately benefit both the buyers and the sellers.
Obviously, some sellers have some natural concerns that sharing this information as part of the negotiation process could lead to a reduction in prices. However, past experience suggest more available data can result in a higher price being paid as a broader and deeper understanding of a portfolio leads to a more informed decision.
But there must be other considerations. In today's economic climate – and with media attention focused on debt collection practices like never before – there are other equally important benefits to sharing credit data at an earlier stage in the process.
Consider the following. Sharing information could aid the ongoing relationship between the lender and the debt purchaser. It could also mitigate potential adverse consumer and media feedback by filtering ot sensitive accounts that may benefit from being retained and worked internally.
Also, by working together and allowing the purchaser to analyse the data at the due diligence stage, both parties would be able to differentiate between the 'can't pays' and the 'won't pays' much earlier than usual. This would create more scope for developing tailored collection strategies to ensure the 'can't pays' can be dealt with more sympathetically. This provides a better experience for this most vulnerable section of society.
The bottom line is data is a key component within the industry. It drives decisions and strategies. The CSA and DBSG think that, if we want to change public and media perception of the industry, everyone has to be prepared to help each other and work as a team.
Giving debt buyers earlier access to credit data would be a huge – and very positive – step forward.
SCOR's governing principle of reciprocity states data should only be shared for the prevention of over-commitment, bad debt, fraud and money laundering and to support debt recovery and debtor tracing, with the overall aim of promoting responsible lending.
It is the belief of many that sharing credit data with debt buyers prior to purchase is fully justified by this principle.
Original article by Andrew Bartle (CSA/DBSG's Representative on SCOR) courtesy of CSA. For further information visit www.csa-uk.com.
