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Bank shares credit details

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I am aware that the following is from 2005 but are banks allowed to share such information under the Data Protection Act?


Bank shares credit details


HSBC has become the first UK bank to share once-secret customer details with other banks and credit companies in an attempt to crack down on irresponsible lending.

Banks have long shared details of customers who have been struggling with repayments, but from now on HSBC will give credit-referencing agencies details of all the HSBC borrowing products customers hold.

A clearer picture

The Association of Payment Clearing Services backed the move. "This will enable lenders to build a better picture of someone's exposure to debt," said spokesperson Mark Bowerman. If more lenders followed HSBC's lead, lenders would be able to see how much debt the customer has already, making them better-placed to work out if they can afford to take on any more.

HBOS - the UK's largest mortgage lender - has also called on the government to release details of council tax arrears and student debts. However, as this demands a massive loosening of the data protection rules, the government is unlikely to bow to this wish any time soon.

Bad debts

The announcements follow BBC claims that trusted high street banks, including Lloyds TSB, have been mis-selling loans and loan insurance.

HSBC's move is a step in the right direction, as evidence mounts that we're starting to struggle with our £1.1 trillion collective debt. Lloyds TSB has recently confirmed that losses on its loans increased by 21% in the first six months of the year. HSBC said its bad debts were also worsening, while figures from the Council of Mortgage Lenders reveal that repossessions have increased by 50% over the last year.

How to measure?

However, even if more information is shared, the fact remains that there's still no effective guidance on how such data should be interpreted. Damon Gibbons, chair of charity Debt on Your Doorstep, said: "There's still a need for an objective measure for over-indebtedness. The government is struggling with this."

Despite government attempts to protect us from debt problems, there isn't any requirement for lenders to ascertain affordability. Paul Latham, finance director for Debt Free Direct, said: "We've got stronger rules for protection after the event, but we need them before the event."

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That is what credit reference agencies do, share information, which reading this seems to be ok under the DP Act. The way I see it is that HSBC are showing any lending their customers have, not just loans etc. Not sure what else there would be though as I am not an expert.

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