CENTRAL BANK proposals to force lenders to report customers’ payment histories to a centralised credit register could fall foul of data protection laws.
Lenders cannot reveal individual credit histories without the customer’s consent. The Central Bank, however, says mandatory reporting must be part of the solution to Ireland’s debt crisis.
Its blueprint for the future of banking, published last week, said: “A well constructed credit register, to which credit institutions are obliged to report, has the potential to be an important tool for both regulatory authorities and the banking industry.”
It said the Irish Credit Bureau (ICB) was not up to the job because the data it holds is reported voluntarily by the lenders that own it. This could have important consequences for the ICB, which is up for sale.
Séamus Ó Tighearnaigh, its chief executive, said: “The law requires that data must be obtained fairly and given voluntarily with a full understanding of the consequences. Without consent, our [financial institution] members cannot report to the ICB.”
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The Office of the Data Protection Commissioner said that, while mandatory reporting is currently impossible, lenders can refuse credit to people who withhold permission to share information. “In relation to the Central Bank supervision strategy, we note that it envisages consultation with interested parties, which would include this office,” it said.
Ó Tighearnaigh denied that borrowers who withhold consent will not get credit, claiming that credit unions will often help members even if they refuse to allow their information to be reported to the ICB.