Banks to share current account info
The new system would see customers give their permission to banks when they apply for a mortgage so that lenders can assess and verify their income more completely – even if they bank with another institution.
The data sharing includes current account information from banks as well as income data collected by other financial services providers as part of their customer relationships.
Equifax said all data use will be in accordance with data governance principles agreed by the key trade associations.
It comes after last week’s publication of the Mortgage Market Review that makes income verification mandatory for all mortgage applications.
Equifax said it believes the system could help lenders improve the performance of loans given that their research shows income verified loans perform up to five time better than non-income assessed loans.
Laurence Hamilton, marketing and performance director at Equifax, said: “The Mortgage Market Review is positive for the industry. It reinforces the practices already being followed by providers in collecting income data, so this shouldn’t add any extra burden to their operations.
“It also puts the spotlight on the importance of verifying income data for responsible lending, which we believe gives the industry a great opportunity to reduce bad debt risk.”
Equifax said the challenge for credit providers is accessing verified income data as “an integrated component of new credit application assessment”.
Hamilton added: “Income data is already being collected by mortgage providers. We are working with these and other consumer finance organisations to facilitate sharing of this valuable intelligence through a series of tools that will enable them to comply with the new regulations as well as improve lending performance.”