Real-time Credit Scoring

Julian Knight Excerpts

Tuesday 2nd February 2016 Commons Chamber

[Chris Evans (Islwyn) (Lab/Co-op)]

Thank you for calling me to speak, Madam Deputy Speaker; it is a pleasure. I have been in this House for six years in May, and this is the first time I have ever been granted an end-of-day Adjournment debate.

I am delighted to have the opportunity to debate the topic of real-time credit scoring. For me, this is a very important issue, especially in the wake of several financial scandals over the years. The financial crash of 2008 proved one thing—that banking needs reform.

Whenever I think of banking, I think of the need for reform. Most people who use banks will want to borrow money and, unfortunately, personal lending and personal loans are the last area to be considered for reform by the Government.

Real-time credit scoring makes complete sense. The term describes the sharing of data from the credit reference agencies in real time or as close to real time as possible. This requires sufficiently up-to-date and complete relevant data from all the banks and financial institutions. People expect choice in any walk of life. It is what our system is based on. In the market for personal loans, the choice is too narrow and too clearly focused on the banks. Real-time credit scoring would shake up the market and bring about real change for consumers and banks.

The Financial Conduct Authority is looking at the issue. The case for regulation to enable data sharing to happen safely and effectively is compelling. If consumers could ask their banks to share real-time data about their account with a prospective lender, lenders could assess affordability more accurately, meaning that they could make more capital available to consumers with lower risk, thereby driving down cost.

[Julian Knight (Solihull) (Con)]

I congratulate the hon. Gentleman on securing this debate on a very important topic. I support his call for real-time credit scoring, which needs to be explored further. In my previous occupation as a financial journalist, I dealt with a lady who got into £107,000 of debt in three days, following a relationship breakdown. If real-time credit scoring had been in place on the high street, she would not have got into such enormous debt, which caused further mental health issues. Perhaps the hon. Gentleman will reflect on that.

[Chris Evans]

I will develop that argument further. The hon. Gentleman identifies the nub of the problem—the delay in credit scoring needs to be addressed. That is common sense and I hope the Government will grasp the nettle.