In Focus Risk
this important responsibility comes at a considerable cost to the CRAs. On one hand the CRAs need to store, update, and manage all the relevant data and have large numbers of staff to respond to consumers’ in-bound calls and enquiries. On the other hand the CRAs can no longer charge the consumer when a request is made to access the credit file or a correction. Again this places the CRA at a competitive disadvantage to other information providers that do not carry those overheads. Most consumers in the UK also believe
that all three CRAs hold identical data. But often this is not the case. That is because, unlike in the USA,
where the Social Security Number is used as a universal Personal Identification Number (PIN), here in the UK, no such PIN is used. It would be much easier for the CRAs,
creditors, and consumers if the CRAs here were allowed to access and use (albeit discreetly) the National Insurance Number. This would allow the CRAs to create one central point for consumers to question their credit file rather than the situation we have now, where they are required to contact all three CRAs.
This would, for example, speed up the
resolution process where a consumer has reason to believe they have been a target of fraudulent activity.
Looking forward Without embracing and reacting to the changes before them, my belief is the current model on which the CRA relies is only sustainable for maybe a further five years. In that period, I expect more lending
decisions to be made based on current consumer behaviour rather than historical credit data. Undeniably ML and data science, with consumer consent will provide
cheaper, faster, and as accurate credit decisions, that can be driven by smaller, more nimble organisations, more in tune with a younger generation of consumers. This lesser reliance on historical CRA-
held credit data at the point of granting credit will, by its very nature, require more anti-fraud and money laundering checks to be undertaken. This undoubtedly is another area of CRA activity that will see a rise in competitor activity. All this competitor activity will lead to an
increase in consumers requesting to see the information held on them by the CRAs. That regulatory requirement to provide a free-to-consumer service cannot be mitigated by the CRAs. There is an American business term I
This would allow the CRAs to create one central point for consumers to question their credit file rather than the situation we have now, where they are required to contact all three CRAs
have often heard, which is ‘beware of the 800lb gorilla’. When the gorilla wakes up and puts its mind to something, it will tread all over anything in its path. I have often thought of the CRA as that
800lb gorilla. But even that great ape has become an endangered species, threatened by the evolution of man. I fear that the future of CRAs may be in danger from that same evolution unless they adapt to the environment they live in. CCR
December 2018
www.CCRMagazine.com
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