As the policy research institute CEPS creates its policy task force on Consumer Credit Data Sharing, it is time for stakeholders to discuss what this means for consumer protection, potential discrimination etc. While credit bureaus are a key feature of responsible lending, how significant are the risks that certain features and characteristics of this element of the “financial infrastructure” be counter productive in achieving responsible credit. What disadvantageous features can we work on to improve, do we agree with the examples of best practice? Below attached are the World Bank’s General Principles for Credit Reporting from Sept 2011.
World Bank (private arm, IFC)
GLOBAL STANDARDS FOR CREDIT REPORTING: The Credit Reporting Standards Setting initiative has been led by the World Bank in collaboration with the Bank for International Settlements (BIS). An international Task Force comprised of representatives from central banks, authorities, regulators, and industry associations was convened under the aegis of the World Bank to develop the first ever set of international credit reporting standards. IFC’s Global Credit Reporting Program is working on the Secretariat and is also represented on the Task Force for the initiative. Over the past two years, the Task Force convened on several occasions and the exchange of ideas and discussions has culminated in the first ever “General Principles for Credit Reporting.” The Principles provide guidance to regulators, authorities, industry participants, financial and non-financial providers of credit as well as the broader subjects of information on setting up credit reporting systems that conform to generally accepted best practices.
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Launch of a New CEPS/ECRI Task Force Group
‘Towards Better Use of Credit Reporting in Europe’
First meeting: June 12th 09:30-15:00, Brussels
Chair: Prof. Dr. Dieter Steinbauer, former Executive Board Member of SCHUFA
In today’s world, financial and technological innovations are changing the space of information and the increasing use of electronic commerce is creating new demand for credit data and its security. The proposal for data protection regulation adopted earlier this year by the Commission is therefore intended to provide a solid ground for functioning digital markets and protection for consumers. This is likely to have significant implications for credit reporting, which is an essential element of facilitating responsible access to finance for consumers, one of the main concerns of the policy makers since the breakout of the financial crisis.
Centre for European Policy Studies (CEPS) and the European Credit Research Institute (ECRI) propose to set up a Task Force to discuss the opportunities that the credit reporting in Europe should grab to respond to the challenges that more data is creating and at the same time provide ground for more efficient responsible lending. The Task Force will also aim to assess how the policy framework should evolve to support this development. For this purpose, we are proposing to produce a Task Force report that finds its basis in four meetings of a group comprised of the most important stakeholders in the field of credit reporting, providing recommendations for market participants and policy making.
CEPS and ECRI wish to engage both users and subjects of credit data, service providers, policy makers, international experts and academics to contribute to this work towards more efficient and secure EU credit reporting. The Task Force will be chaired by Professor Dr. Dieter Steinbauer, an expert in the field of credit reporting systems. Dr. Elina Pyykkö, researcher at ECRI, will act as rapporteur of the Task Force.
Please click here to download the prospectus and the registration form.
Details:
CEPS is collaborating in the Task Force with the World Bank, which published principles of credit reporting last year and is now in the process of assessing the implementation of the principles. Through this cooperation, we wish to assess the challenges and opportunities these principles provide for European creditors, and make recommendations for the future better functioning framework. The World Bank is using this Working Group to hear the voice of the market players in this context, to further use in their implementation assessment work. The current data protection regulation reform process is going to be an essential base for discussion in the working group, given that it is going to affect consumer credit data sharing in financial services significantly. Therefore, we also have participation from the Commission services, and a representative of DG JUSTICE is going to give a presentation of their views on the matter.
The purpose of the Task Force Group will be to provide recommendations as to how can consumer credit data be used more efficiently to prevent consumer over-indebtedness and increase financial inclusion. These are challenges in today’s digital world of more data and diverse online services, and the reform of the data protection legislation currently under process in the EU legislative bodies is bringing the discussion even more on the loop. Also the current work that the European Parliament is currently doing on access to basic bank accounts is something that should be looked at consistently together with the efficiency of consumer data sharing. We are also foreseeing to coordinate our work with DG SANCO, as they are currently reviewing the implementation of the Consumer Credit Directive. The World Bank is also involved in the Task Force in order to maximise the group’s potential in contributing to the work they have done on principles in credit reporting.
CEPS wants to build a Working Group that comprises of representatives of all the important stakeholders (subjects, users, and providers of personal data, as well as the legislators) in order to develop an output that has relevant recommendations for policy making. Therefore, we consider the participation of institutions representing also the consumer’s perspective very important for the Working Group.
Credit reporting: Towards better access to credit and protection for consumers
In this new commentary, Elina Pyykkö looks into the importance of credit reporting systems in developing more efficient, secure and stable European retail credit markets. While acknowledging, that the current reform work on the protection rules in Europe is of high importance, aspects such as efficiency and competition need to be assessed in order to promote stable playing field for different players – again for them to be able to provide credit reporting which respects the rights of consumers. Pyykkö stresses, that instead of being perceived as something to be simply regulated for the sake of consumer protection, credit reporting could be considered a tool for promoting responsible lending, the fair pricing of financial services and financial inclusion. To achieve this, a consensus among both lenders and borrowers about the merits of a robust mechanism for sharing credit information is called for.
To download this commentary, please follow the link (Download), you will be redirected to the CEPS website. |
