A comparative analysis of the US and EU retail banking markets - Wsbi

The Fair and Accurate Credit Transaction Act of 2003
has amended the FCRA to improve the use of
information and consumer access to credit information.
One of the changes introduced by the 2003 Act is
the obligation for all consumer reporting agencies to
provide consumers with a free copy of their credit
report once every 12 months, upon request by the
consumer and free of charge. This obligation has
raised some concerns 275 .
The content of a typical consumer credit report is
usually quite large and can include, firstly: name, last
reported address, marital status, social security number,
date of birth, spouse's name, number of dependents,
previous address, and employment information.
Secondly: a list of the consumer's credit information
including credit account numbers, the creditor's name,
the amount of last payment, the credit limit of the
account and the timeliness of the credit payments.
Thirdly: some reports include a list of public record
information which includes tax liens, court judgments,
and bankruptcies. Finally, there is an inquiry section
that records all those creditors that have reviewed a
copy of the credit report.
Credit reporting agencies are required to provide
reports only to those who have a permissible
purpose for the information (permissible purpose is
restrictedly defined by the FCRA Act).
Privacy is an essential aspect of consumer credit
reporting. The Right to Financial Privacy Act from
1979 provides privacy protection to customers of
financial institutions when the Federal government is
seeking financial record information. This Act
prohibits government authorities from gaining
access to information contained in the financial
records of any customer of a financial institution or
card-issuer unless certain conditions are met (e.g.
prior authorisation by customer, existence of an
administrative penalty or search warrant).
6.2.1.2 European Union
6.2.1.2.1 Size of the consumer credit market
The outstanding volume of consumer credit market
in the EU 15 in 2004 reached €893 billion, which
corresponds to 9% of EU 15 GDP (see Tables
19 & 20).
The outstanding volume of consumer credit varies
greatly from one Member State to another, even
between countries of similar size and economies.
For example, in 2004 the UK consumer credit market
amounted to near €260 billion while in Italy (with
a population close to the UK), the consumer credit
market represented only €61 billion.
Consumer credit in the EU 15 has increased at an
annual growth rate of 5% since 2000 (see Table 19).
The table shows that although the levels of growth
vary considerably from one country to another
(e.g. Greece registered an increase of 33% while
the UK’s increase was in the range of 6%), the
evolution has been constantly positive in terms of
growth, except for Luxembourg where the
outstanding amount of consumer loans has been
slightly decreasing since 2000.
In terms of outstanding volume of credit per
inhabitant, in 2004 the average was about €2,300
for the EU. Here again, substantial differences are
observed among the EU Member States: while in the
UK the average credit reaches nearly €4,300, in
Portugal the average credit is €860 (see Table 21).
Looking into a common type of consumer credit like
credit cards, in 2003, the number of credit cards per
1,000 inhabitants was 580 276 , translating to 0.6 cards
per EU citizen.
275 For instance, America’s Community Bankers is particularly concerned about the cost of sending yearly privacy notices to customers. They are of the opinion
that institutions that do not make changes to their privacy policies should be exempted from the need to send annual privacy notes.
276 Source: ECB-Blue Book Addendum incorporating 2003 figures, August 2005.
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