Newsletter April 07

COFACE Families Europe Fighting over-indebtedness

Last year, Families Europe contributed to a Spanish book entitled “Preventing over-indebtedness: towards responsible lending and consumption” which is now available online (La prevención del sobreendeudamiento privado. Hacia un préstamo y consumo responsables), writing about the Belgian public credit register and the roles it could play in helping to prevent over-indebtedness.

For families, having access to key financial services such as credit greatly depends on the creditworthiness process, which varies from country to country. In some cases, financial service providers rely on private credit registers which, for allegedly increasing their accuracy, expand the data about consumers beyond credit and defaults. This mushrooming in the data points collected about consumers is problematic on many accounts besides the self-evident violation of privacy: inaccuracy of the data, financial exclusion/discrimination of certain categories of the population…

Families Europe has been an early supporter of the Belgian public credit register and adopted a policy position about it back in 2009. The main advantages of such a system are the underlying quality of the data (centralized with banks being mandated by law to share their internal data), the transparency and accessibility of the data for consumers (free access to its content), the official mandate of the public credit register as a tool to prevent over-indebtedness and the multi-stakeholder approach in the management of the public credit register which decides how it should operate and which data should/shouldn’t be included (consumers and data protection authorities part of the decision making process).

At present, Families Europe is engaged in a reflection, in cooperation with other key stakeholders such as EFIN and BEUC, about rethinking creditworthiness and how it could be assessed, in full respect of data protection and privacy, financial inclusion and over-indebtedness prevention.

For more information about this topic, contact Martin Schmalzried: mschmalzried@coface-eu.org

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