UK.gov may allow data sharing on 40 million bank accounts

The government is considering allowing banks to share data on up to 40 million bank accounts without account holders' permission. The plan is one of four being considered by the Department of Trade and Industry (DTI).

In a move to counter what it calls the UK's over-indebtedness, the DTI wants to share information on 40 million bank accounts to prevent their users borrowing too heavily. It will consult with industry on four plans, two of which involve ordering that debt data be shared.

The accounts involved were opened before banks routinely asked permission to share account data with credit reference agencies. Mostly they are accounts opened before the late 1990s. That means there is no permission from users for the sharing of information and these account holders cannot be subject to now-commonplace credit checks on those accounts.

"As part of our over-indebtedness strategy we want lenders, where appropriate, to share relevant data about the amount of credit that is available to an individual consumer and their credit use, and to use this information to make responsible lending decisions," said Ian McCartney, Minister of State for Trade, Investment and Foreign Affairs in the introduction to the consultation document.

"I recognise the current good work of the credit industry in sharing more data and in developing new ways to predict and respond to over-indebtedness through data sharing. This can only help lenders and borrowers alike to minimise levels of bad debt," he said.

The document makes four proposals. Two of those involve ordering that data on these accounts be shared. While one of the proposals allows account holders to "opt out" of having their data shared, the other has no such provision, leaving the user with no choice about the sharing of data.

The paper is a consultation document and is designed to provide a starting point for consultation with the financial services industry and consumer groups.

The paper does say, though, that the DTI's preferred option is so-called option three, which involves ruling all the data available for sharing but allowing customers to opt out of the sharing. That option, said the paper, would require legislative change in order to be legal, it said.

That proposal will conflict with existing data protection legislation. "It is clear that the government is seeking to put data sharing of financial details on a statutory footing, but it is unfortunate that the consultation document expresses this intention in terms of "circumventing existing data protection legislation" – the phrase used in connection with option three which is the government preferred option," said Dr Chris Pounder, a data protection specialist with Pinsent Masons, the law firm behind OUT-LAW.

Pounder said the consultation may be seen as window dressing, since it is clear which option the government prefers. "There is a risk that many will see the objective of the consultation exercise as not one of "should we share financial data?" but rather one of gathering evidence to justify an action the government has already decided to take," he said.

The DTI says around 40 million bank accounts exist whose data cannot currently be shared. It estimates that 33 million of those are currently active.

See: The consultation paper (56 page/55Mb PDF)

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