CM April 2020

CREDIT REFERENCE AGENCIES
AUTHOR – Sean Feast FCICM
“Companies need
to be aware of the
extra pressures their
customers may face and
treat them appropriately
when they are struggling
to meet payments. This
can be achieved by
developing strategies
for these customers that
proactively engage with
them to offer additional
support.’’
vulnerability and debt are issues that cut
across CRAs, regulatory bodies, charities
and government,” he says. “An FCA
study found that some consumers find
communicating with large organisations,
or accessing products, difficult.
Financially vulnerable consumers can
also find that they are unable to obtain a
flexible, tailored service that meets their
specific needs.
“Companies need to be aware of the
extra pressures their customers may face
and treat them appropriately when they
are struggling to meet payments. This can
be achieved by developing strategies for
these customers that proactively engage
with them to offer additional support.
We urge individuals struggling with debt
repayments to talk to their creditors as
soon as possible and compel creditors
of all types to use data-driven methods
to identify customers at risk of financial
difficulties and support them in accessing
high quality advice.”
Satty says that TransUnion is already
providing access to data that can
be utilised by businesses to support
those that are in vulnerable financial
circumstances, and evolving technology
further enables this: “Open Banking, for
example, is showing much promise in this
area by offering consumers more control
over access to their financial information
and helping businesses more accurately
assess creditworthiness.”
Identifying how data and technology
can be used to better support vulnerable
customers is something TransUnion
says it is actively involved in. Satty says
it recently contributed to the Financial
Inclusion Policy Forum’s Fair4All
consultation which considers the role of
data in the affordable credit market, and
whether new data sources could improve
providers’ ability to make appropriate
lending decisions for those who find
themselves excluded from affordable
credit or are in vulnerable financial
circumstances.
“We place great importance on
leveraging data to help clients better
identify consumers who are in financial
difficulty or showing signs of financial
vulnerability,” Satty continues. “Based on
this analysis they can ensure consumers
are supported and offered forbearance
where appropriate. Done well, it can
help clients identify pre-emptive lead
indicators and take action that helps
consumers who, for example, could be in
persistent debt as a result of affordability
problems, leading to better outcomes for
all involved.”
Satty says that as a business, TransUnion
has a strong legacy of developing solutions
that help enable responsible lending
and protect consumers: “As far back as
2006, we launched our first affordability
solution in the UK – an industry first at
the time – and we continue to look for
other opportunities to assist clients and
ultimately consumers.”
OPEN BANKING
Continuing the Open Banking theme,
James says that Experian was the first
large credit reference agency to receive
FCA accreditation to supply Open Banking
services: “We now work across with a wide
range of organisations to bring its benefits
to people,” he says.
“For example, Money Advice Scotland
is piloting our open banking technology
which could help them to significantly
speed up the initial stages of debt advice.
The money charity’s new webchat service
uses Experian’s open banking tool to
gather crucial income and expenditure
data, as well as a statement of consumer
credit debts. It takes just minutes, as
opposed to the weeks and months it
can take to gather this information over
several advice appointments.”
Such innovation from Experian is
matched by similar developments
amongst its peers.
In 2019 TransUnion introduced new
products to the UK market that can help
support both consumers and businesses
alike: “TransUnion’s CreditView is a
white-labelled, interactive tool that
helps finance providers to educate and
empower their customers by providing
access to their credit report and score,”
Satty explains. “Our research has shown
that 40 percent of those who actively
engage with their credit score typically
see it increase within the first six months
of regular monitoring. This ensures
access to competitive rates and enables
finance providers to tailor offers for the
individual’s needs.
“We also introduced our TrueVision®
trended data solution which helps deliver
better outcomes for both businesses
and consumers, by providing a more
nuanced and comprehensive picture of
an individual’s financial standing. This
allows financial institutions to leverage
new consumer insights and looks beyond
a single snapshot to a person’s financial
standing over time to help lenders better
understand and evaluate their customers’
credit risk.”
LATEST INNOVATIONS
Equifax has also been innovating. One
of its latest developments, in partnership
with AccountScore, is a new credit risk
index for the consumer lending sector:
“The index is based upon the
transactional information found within
a consumer’s bank account and takes
advantages of the opportunities provided
by Open Banking to develop new products
that better understand consumers,”
Jayadeep explains.
Equifax says the index can be taken as
a standalone product or combined with
traditional credit risk metrics to provide
a fully-rounded understanding of the
affordability of the credit to a customer
and the customer’s creditworthiness. It
combines AccountScore’s custom built
transaction categorisation engine with
the Equifax transaction data behavioural
characteristics – identified as being
leading predictors of creditworthiness
and affordability.
Advancing the credit profession / www.cicm.com / April 2020 / PAGE 19