Regulator's proposals could spark privacy row and may have data protection and human rights implications
The personal financial information of millions of people – including how much they earn and whether they have fallen behind on any payments – is to be "collected and processed" by the UK's main financial watchdog as part of its attempts to police the mortgage market.
However, the Financial Conduct Authority (FCA) could spark a row over privacy after acknowledging that its proposals may have data protection and human rights implications.
The regulator is promising that people's personal data will be "fairly and lawfully processed," and said the plans mean it will be able to share information with the police about suspected mortgage fraud. However, it will also be sharing the data with the Bank of England and its Prudential Regulation Authority.
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If the FCA's proposals are approved, it will begin harvesting vast amounts of data relating to both new and existing mortgages.
For new home loans this will include:
• details of each borrower's income, such as bonuses and overtime pay
• information on household spending and other commitments such as maintenance and child support
• total outstanding credit commitments such as loans and credit cards
• whether the borrowers have any financial black marks against them, such as loan arrears or county court judgments
• the number of dependent children they have
• the age at which they are planning to retire
The "performance data" gathered on existing mortgages would be less detailed but include the property's postcode and an estimate of what it is worth, plus information on the current outstanding balance and any arrears.
It has been clear for some time that those who apply for a mortgage can expect lots more personal questions as a result of the FCA's ongoing shakeup of the home loans market, designed to prevent a return to risky lending.
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| Millions of people could be affected by FCA proposals to 'collect and process' personal financial information. |
As part of its long-running "mortgage market review", originally announced in 2009, new rules covering the sector will take effect in April 2014. However, the FCA's desire to collect much more detailed information about individual borrowers will have come as a surprise to many.
The FCA said the plans reflected its objectives to protect consumers by: helping it identify risks and prevent harm; enabling it to make "quicker and bolder" decisions to keep the market running efficiently; promoting effective competition.
However, the regulator acknowledged that the proposals will mean it will have responsibilities under data protection and human rights acts:
"Any personal data we collect will be fairly and lawfully processed in compliance with the first data protection principle ... We consider that in collecting the data we will be acting compatibly with the right to privacy. The collection of the data is necessary to achieve the aims set out in this consultation paper, and any interference with the right is proportionate to those aims."
The information will be used by the FCA's "policy, risk and research division", in its role as the regulator's "radar," to identify and analyse trends in the market "and provide a more intelligent view of the issues we, consumers and industry face".
The plan is that banks, building societies, credit unions and other mortgage firms would need to begin collecting the new data from the start of 2015. The changes will mean extra costs for the 250 companies that submit mortgage product sales data.
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Article source : http://www.guardian.co.uk \
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