Clause 25 - Credit information services
Consumer Credit Bill
4:45 pm
Mr Laurence Robertson (Shadow Minister, Economic Affairs; Tewkesbury, Conservative)
I beg to move amendment No. 25, in clause 25, page 18, line 6, at end insert—
'(2A) It shall be the responsibility of individuals, partnerships, companies or organisations acting as credit information services as defined in section (7B0 of the 1974 Act, or acting as credit reference agencies as defined in subsection (8) of section 145 of the 1974 Act, to take all reasonable steps to ensure that the information which they store on any individual, partnership, company or organisation, and which they impart to a third party, is accurate, up-to-date, and gives a true reflection of the credit record of the said individual, partnership, company or organisation.
(2AA) Failure to take the steps identified in subsection (2A) shall give rise to the opportunity for the individual, partnership, company or organisation to seek compensation through the civil courts for the keeping of inaccurate information.'.
I attempted to address this amendment prematurely a few moments ago. It refers to credit agencies that store information on our behalf then pass it on to third parties when asked. I have always been concerned at how some of those companies operate, and I raise the issue seeking to strike a balance. As the Minister said, credit can be good and reasonable—for example, when people borrow for houses, motor cars or business purposes. However, many people cannot get credit or borrow money because of their credit references. It is important that people keep good credit records in order to avoid situations such as the tragic case that we heard about earlier of the poor gentleman with 22 credit cards. That is undesirable, but it might have happened because of inadequacies in a credit rating system rather than the system being too prescriptive. I regret those situations, just as I also regret the fact that good and decent people of reasonably sound financial standing are turned down for credit.
We are all aware of how credit agencies work. Some years ago, just after I had moved house, I wanted to take out a short-term loan for some reason that I cannot remember. I was turned down, so I asked why. I was told that it was because of the credit reference. However, the credit reference had nothing to do with me; it concerned the people who had lived in the house previously. I examined their record, and it was disastrous. I could well understand why nobody wanted to lend them money. However, that was not my position. It was a very sloppy way to do business, and it could have become a problem for people who were trying to get credit at a time either of personal difficulty or, alternatively, at a time of great opportunity because their situation might have become worse or they could have lost that opportunity.
In other areas of life, the provision of incorrect information can often give rise to the right to seek compensation. Through this amendment I propose that credit agencies should be responsible for taking
''all reasonable steps to ensure that the information which they store on any individual, partnership, company or organisation and which they impart to a third party, is accurate, up-to-date and gives a true reflection of the credit record of the said individual, partnership, company or organisation.''
The amendment also proposes that
''failure to take the reasonable steps identified in subsection (2A) shall give rise to the opportunity for the individual, partnership, company or organisation to seek compensation through the civil courts for the keeping of inaccurate information.''
That is a departure from the present law—or the present lack of law. The issue concerns me greatly.
I do not know whether this is the best approach or whether my amendments are worded as well as they could be, but the issue must be tackled. It places no additional regulation or burden on companies. By analogy, other organisations such as banks, solicitors' offices or accountancy firms have a duty of care to the client. The question is: who is the client? A credit agency's client might well be the company that applies to them for the credit reference, but there is still a duty of care to the person on whom information is being kept.