Consumer Credit Bill

moved Amendment No. 35:"Before Clause 62, insert the following new clause—"    ““DATA SHARING (1)   In this section— ““authorised person”” means any person who is— (a)   a consumer credit business or consumer hire business; and (b)   a data controller; ““data controller”” has the meaning given by section 1 of the Data Protection Act 1998 (c. 29) (basic interpretative provisions); ““personal data”” has the meaning given by section 1 of the Data Protection Act 1998. (2)   It shall be lawful for an authorised person to disclose to a credit reference agency any personal data relating to a debtor which are processed by him if the conditions in subsection (3) are satisfied, notwithstanding that the debtor has not given his consent to such disclosure. (3)   The conditions are that— (a)   the authorised person has given the debtor notice of his intention to disclose the debtor’s personal data under this section; and (b)   the debtor has, within 28 days of the date of that notice, failed to give the authorised person notice that he does not consent to the disclosure of his personal data. (4)   It shall be lawful for— (a)   a credit reference agency, or (b)   an authorised person, to process and use personal data disclosed under subsection (2). (5)   Regulations may make further provision in relation to disclosure of personal data under this section.”” The noble Lord said: The purpose of the amendment is to introduce a new clause, which has the effect of modifying the Data Protection Act 1998 to allow a lender to disclose to a credit reference agency information about a debtor, without the consent of that debtor, where 28 days’ notice has been given to that debtor, and he has failed to respond. The Data Protection Act has the laudable purpose of protecting the privacy of individuals about whom information is stored, usually on a computer. Concerns have understandably been widely expressed in debates on this Bill about debtors being sucked into a morass of unsustainable debt from which escape is difficult because they incur liabilities which their means will never permit them to repay. Most lenders already share data on their credit agreements with the credit reference agencies. In order to do that on individuals’ accounts, data protection legislation requires lenders to notify the individual that their data will be shared and the purposes for which that data will be used. Since the enactment of the Data Protection Act that has typically been managed by including an appropriate clause in the application process. However, credit agreements entered into before the Data Protection Act was contemplated do not tend to allow for data sharing. Therefore, accounts that were opened prior to that time are not eligible for inclusion in credit files until the account holder gives his consent for the data to be shared. Lenders undoubtedly have a vested interest in lending responsibly. Responsible lending reduces credit losses, and increases profitability, so that lenders have an economic incentive to make the best credit decisions they can. Also, lenders are very conscious of the reputational damage that can ensue from irresponsible lending practices and no lender wants to be seen as causing, or even contributing to, an individual’s misfortune. For accounts with a long life, such as credit cards or current accounts, the result is that it could be decades before all of a portfolio is available. The resolution of this issue is the subject of this amendment. I beg to move.