You’ll read this week that rather shortsighted commentators are giving plaudits to the Government and regulators for allowing data sharing amongst the big lenders. The laudable aim behind this is that if the lenders can truly see the extent of their customers’ lending they won’t lend to the over-indebted. Sounds good?
What a ridiculous farce! Only in the UK when we have the most competitive credit situation possible, could we decide to lose that by sheer laziness. It doesn’t take a rocket scientist to work out what’s going to happen. We have put control of debt in charge of the companies who make money out of it.
For years credit card tarts, system players and others have reaped the reward of competition. Now the banks have access to data that can score them out. The potential worst case scenario is anyone who correctly borrows is refused credit because it won’t be profitable…. and we’ve given them this power. If you think this is me scare mongering, I’ve heard the whoops of joy from back office credit crunchers at various lenders at the enormous new customer filtering power this gives them.
The problem stems from the evidence that was given. The wonderful debt counselling agencies were asked “how do we stop people borrowing into debt crisis?” Their answer understandably was “don’t allow them to borrow”. Yet the question “what impact will this have on the whole market?” was never asked. So to protect the bottom 10% of the market, we’re risking cutting the credit for the top 90%. This means more expensive borrowing, and guess what that means? …. yes more people in debt crisis!
The knee jerk stupidity shocks me. We are a nation educated into debt with student loans, but never educated about debt. And now when people are finally starting to learn, we hand over the reins to the industry. Glory be GB!