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

The Commission’s proposal to revise the existing
Consumer Credit Directive (87/102/EEC Directive) 286
includes an obligation for creditors to seek to establish,
among the credit agreements they usually offer or
arrange, the most appropriate type and total amount
of credit taking into account the financial situation
of the consumer, the advantages and disadvantages
associated with the product proposed, and the purpose
of the credit (Article 6. par. 3 of the proposal) 287 .
This obligation has been maintained in the revised
version of the proposal adopted by the Commission
in October 2004 288 . The credit industry is of the view
that the obligation to seek to establish the most
appropriate credit would indeed lead to introducing
a general duty to advise. The industry is furthermore
unanimously opposed to such an obligation and argues
that information disclosure and duty to advise are
two distinct services the latter being an additional
one for which consumers should voluntarily opt for.
6.2.1.2.4 Credit databases and credit bureaus
Credit bureaus are generally defined as databases
of information on borrowers in a financial system.
The data is provided by lenders, courts, tax authorities
and is managed by central banks, private companies
or professional association 289 .
Credit bureaus and credit databases in Europe are
characterised by their heterogeneity. Across the EU,
there are private and public databases, as far as
ownership is concerned, and positive and negative
databases, as far as the content of the database is
concerned. In positive databases, all financial behaviour
information from a particular consumer is reported
while in a negative database only defaulted credit
information is reported. National central banks usually
hold a public database which contains either extensive
credit worthiness information (such as the positive
databases which are in operation in Spain) or just
information on defaulted payments (as in Denmark and
France). Financial institutions are required to provide
central banks with the relevant credit information.
The information collected is normally available, on a
reciprocal basis, to institutions reporting to the database.
The existing databases are organised at national level.
There are however recent initiatives among credit
bureaus to foster closer cooperation and to serve
mutual interests within the EU but also in third
countries. A Memorandum of Understanding to
exchange credit information was signed in February
2002 by the national central credit registers (a central
banks) from: Germany, Austria, Netherlands, Italy,
Portugal, Spain and Belgium. Such initiatives should
allow lenders to access credit worthiness data in
different Member States. Examples of cooperation
among credit bureaus can also be found beyond the
EU. For example, the Association of Consumer Credit
Information Suppliers (ACCIS), which represents public
credit data holders such as the Belgium National
Bank and private ones such as Equifax UK 290 ,
is a partner of the Global Consumer Credit
Reporting Network, an international platform in
which the US Consumer Data Industry Association
(CDIA) is a participant.
There are no EU laws specifically dealing with
consumer credit information and the obligations of
credit bureaus. The EU Directive on Data Protection
from 1995 291 however regulates any commercial
activity involving the collection and management of
personal data. The Directive protects the fundamental
rights and freedoms of natural persons and in
particular their right to privacy with respect to the
processing of personal data. It also sets minimum
requirements for data collectors allowing Member
States to determine more precisely the conditions
under which the processing of personal data is
lawful 292 . Further, it provides a list of information to
be given to the individual object of the data which
includes the identity of the data controller, the
purposes of the data processing, the existence of the
right of access and the right to rectify personal data.
286 Directive of the European Parliament and of the Council on the harmonisation of the laws, regulations and administrative provisions of the Member States
concerning credit for consumers. COM(2002) 443 final. 11.9.2002
287 Proposal for a Directive of the European Parliament and of the Council on the harmonisation of the laws, regulations and administrative provisions of the
Member States concerning credit for consumers. COM(2002) 443 final, 11.9.2002.
288 Amended proposal for a Directive of the European Parliament and of the Council on the harmonisation of the laws, regulations and administrative provisions
of the Member States concerning credit for consumers repealing Directive 87/102/EC and modifying Directive 93/13/EC. COM(2004)747 final, 28.10.2004.
289 “Credit Bureaus in today’s credit markets” ECRI Research Report N°4 from Amparo San José Riestra.
290 Information obtained from www.accis.org.
291 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of
personal data and on the free movement of such data. OJ L. 281 P. 31, 23 November 1995.
292 Data should be collected for specific, explicit and legitimate purposes and no further processed in a way incompatible with those purposes; Article 6 of the
95/46/EC Directive.
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