Banks to share data to cut debt problems

Published on Thursday 30 March 2006 12:28

FOUR of the UK's five biggest banks today agreed to share information about customers in an attempt to spot people who are struggling with debt before they default on repayments.

Under the initiative, HBoS, HSBC, Lloyds TSB and Royal Bank of Scotland will share details on their customers' incomes with Callcredit, the credit reference agency, for the first time.

Every month a computer system will analyse current account data held by banks on customers, cross checking it against information on people's credit commitments held by Callcredit to measure their ability to make repayments.

Banks will be given details on people who appear to be struggling so that they can offer them debt management advice and not advance them any further credit.

The system will also highlight people whose positions need close monitoring, and will issue daily alerts on customers whose changing levels of indebtedness may be a cause for concern.

Barclays, Britain's biggest credit card lender, said that while it welcomed the scheme it had chosen to focus on a separate initiative, launched in December, to share information on spending.

One of the problems with current systems is that they fail to pick up on people who may be struggling with debt but are still managing to make the minimum repayments each month.

A pilot carried out by Callcredit and the banks found that around one in ten consumers had levels of debt which were not sustainable over the long-term.