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Real-time data for payday lenders

British notes and coins15/1/14

By Simon O'Hare

Payday loan firms including Wonga are to start using a new "real-time" information sharing service about consumers' borrowing habits.

The new service is aiming to help them improve their lending decisions and is being launched by credit reference agency Callcredit.

It will tackle concerns that lenders should have the most up-to-date and accurate snapshot of a potential borrower's circumstances when they make a loan request.

The agency said the initiative will have a "major positive impact for both lenders and consumers".

The move comes after the Business, Innovation and Skills (BIS) Committee called in December for better sharing of up-to-date information between payday firms.

Borrowers taking out multiple loans

This is so they can stop struggling borrowers from spiralling into further trouble by taking out multiple loans with different lenders.

Regulator the Financial Conduct Authority (FCA), which will oversee the payday loan industry from April.

Lenders will begin testing the system in April, with the aim of it being used to help enable more accurate lending decisions from early May.

Callcredit's real-time initiative will run alongside its existing monthly reporting service.

New service will plug an information gap

The new service aims to plug an information gap by giving a more timely assessment about credit risk, affordability and the risk of fraud associated with new lending applications.

It will include information such as whether payments have been received as expected, any rollovers to loans and extensions to credit or changes to payment terms.

Callcredit said that although much interest in the initiative has come from short-term payday lenders, it will not just benefit this sector.

There has also been an appetite for it from the "mainstream" lending industry.

New service included in credit reports

Any lender that contributes to the initiative will be able to access it and consumers will also be able to see it included in credit reports.

Callcredit said that any solution that just concentrated on the payday loans industry alone would not get to the root of the issue as customers in the UK tend to also have other forms of debt.

Wonga's head of decision science, Rael Sarembock, said: "Wonga is a business built on the intelligent use of quality data to make accurate and responsible lending decisions.

"As a long-term partner of Callcredit, we welcome their real-time data-sharing initiative and anticipate that it will assist in further improving our decision-making processes.

Wonga will include info from data-sharing plan

"Wonga will begin including information from Callcredit's real-time data-sharing initiative once it goes live as part of the comprehensive suite of data we already use in every loan decision."

Wonga hopes the initiative will be adopted beyond the short-term credit sector and across all UK consumer financial services.

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