London, May 2012 - Following the Office of Fair Trading’s announcement in March of plans to investigate the payday loan industry, and the subsequent report on the sector released by the Business, Innovation and Skills Committee, leading credit reference agency, Equifax, is urging all parts of the market to continue to work together to share data.
The BIS Committee report stated that credit checking is a key factor in ensuring appropriate lending to consumers and it highlighted a concern that not all payday providers are recording all their transactions. As a result it recommended that payday lenders record all loan transactions on a shared database so that consumers’ credit histories can be accurately monitored.
Neil Munroe, External Affairs Director, Equifax believes that the established credit reference agencies have the skills and experience in place to meet this requirement. But, whilst Equifax is already working with a number of payday lenders, he is concerned that not all the companies in the sector are participating with full data sharing. And he believes this could mean a growing proportion of the consumer market, particularly those known as the ‘unbanked’, could be financially excluded in the future because any good repayment history they have achieved on payday loans is not being demonstrated to all lenders.
“Sharing data about customers’ payment behaviour would enable payday lenders to check that they are not lending irresponsibly to people who have multiple loans and who are rolling debt over from one payment period to the next” explained Neil Munroe. “But, as importantly, when the data is also made available to mainstream lenders, such as the high street banks, this will help to rehabilitate the credit records of higher risk borrowers who repay their payday loans on time.”
“There is no question that finances are difficult for many people and the payday loan sector provides a solution for some. But it is also vital that consumers are not allowed to simply get deeper and deeper into debt by rolling over loans or simply switching from one lender to another” concluded Neil Munroe. “Full data sharing by the payday lenders will address that risk.”
Equifax is encouraging the payday loan sector to work together over the coming months and is arranging a series of meetings to facilitate the best approach to data sharing.
For further press information please contact: Wendy Harrison, Louise Fowler or Clare Watson at HSL on 020 8977 9132 / Fax: 020 8977 5200 or Email: email@example.com
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