Credit Rating Agencies (Hansard, 1 May 2003)

§ The Parliamentary Secretary, Lord Chancellor's Department (Baroness Scotland of Asthal)
My Lords, the Information Commissioner, who operates independently of the Government, announced on 28th April that he is now looking to establish a firm date for full implementation across the whole of the credit industry, including the credit reference agencies, of the new procedures to restrict disclosure of such third party information. The Data Protection Act requires information to be both accurate and adequate and the commissioner can take enforcement action if it is not.

§ Lord Higgins
My Lords, I thank the noble Baroness for that Answer. Is it not a disgrace that five years after the enactment of the Data Protection Act, and a year after I first raised the question with the Minister, the credit rating agencies are not complying with the legislation? Does the Minister accept that we must have a deadline? She mentioned that the commissioner proposes to have one. In fact, the Minister failed to mention the date to which she referred last May. What is the deadline now?
As to the second part of the Question, the Minister said that the information must be both accurate and adequate. Is it not the case that while people can complain about the inaccuracy of data—and certainly many people have done so—they are not able to insist that the credit rating agency adds to the information it holds, with the result that some people, either very rich or very prudent, are not able to get a credit rating, which is particularly important if they wish to open a bank account?

§ Baroness Scotland of Asthal
My Lords, I understand the passion with which the noble Lord makes his comments in relation to his description of the credit rating agencies' approach. I said on the previous occasion that this matter is very much within the province of the commissioner. As the noble Lord 843 knows, the commissioner is now Richard Thomas. He has a duty to look at this issue. He has now issued a press release suggesting that compliance should take place across the whole sector not later than the end of 2004. He has not given a date but he has certainly said that. I remind the noble Lord that it is not only the agencies which have to become compliant. Other entities have to get their systems in place to enable them to produce the necessary information.

§ Baroness Byford
My Lords, is not the Minister concerned that people are losing their jobs, or not being taken on, simply because they are unable to open a bank account? Is not the Minister concerned that certain credit facilities require extra information to be taken into account? The small print of a credit agreement may state, Information about you and other members of your household and those with whom you are financially linked, will be used to verify your identity for credit assessment of you and them", even though they are not applying for credit facilities. Surely that is totally unsatisfactory.

§ Baroness Scotland of Asthal
My Lords, there are concerns in this area but the noble Baroness will know that it is for lenders to decide whether to grant credit based on their own commercial judgment, including an assessment of the risks involved in any case. I can understand that there are difficulties. The noble Baroness will know also that, historically, both the previous commissioner and the current one have looked at the matter very robustly. The commissioner's role is not only to enforce but to persuade and encourage improvement in services, and both the previous commissioner and the present one have undertaken to do so.

§ Lord Newby
My Lords, many on all sides of the House will be concerned about the Minister's previous answer. If people find themselves denied credit, it may not be literally a life or death matter but it will have a very serious impact on their ability to conduct their daily lives. I find extremely worrying the apparent lack of urgency with which the matter is being pursued and the long deadline which has been imposed. Will the Minister look at the issue again and encourage the Information Commissioner to consider whether the deadline to which she referred might be brought forward somewhat?

§ Baroness Scotland of Asthal
My Lords, let me say two things in response to the noble Lord's question. First, the Information Commissioner has not set a deadline of the end of 2004; he has said that it should be no later than that. At the moment he is actively considering when the fixed date should be, but he has alerted the industry that the very latest point will be that date. I make that plain straightaway. Secondly, noble Lords will know that under Section 7 of the Data Protection Act it is possible for individuals to obtain a copy of the information held about them by a credit 844 reference agency for a fee of £2. If they find that their credit file contains information about people in their family with whom they have no financial connection, they can write to the agency to dissociate themselves from them. Further information about this is given in the leaflet "No Credit?", which is available, free of charge, from the Information Commissioner's office. So individuals can take action to correct the information held on file about them.

§ Lord Higgins
My Lords, the individual can ask for the information to be corrected but cannot add to it if it is totally inadequate. The Minister has not answered the second part of the Question at all. Will she now do so?

§ Baroness Scotland of Asthal
My Lords, an individual is entitled to have an entry amended or information in the entry expunged. I understand that it is possible to request that a note be kept on the file. I emphasise that this is not within the Government's gift. The matter is being dealt with, quite properly, by the Information Commissioner, as is his right and duty.