Principles of Reciprocity

Why do you need to know?

Credit unions that use credit referencing agencies, as a financial institutions that share information or use shared information about members’ personal credit performance, must comply with the Principles of Reciprocity as part of their agreement with the credit reference agency.

Please read this information guide alongside the SCOR Principles of Reciprocity document available at: http://www.scoronline.co.uk/key-documents.

The Key Points

• The Principles of Reciprocity are a set of guidelines governing the sharing of personal credit performance and related data via the closed user groups of the credit reference agencies (CRA), currently Experian, Equifax and Callcredit.
• The “governing principle” makes sure that data is shared only for the prevention of over-commitment, bad debt, fraud and money laundering, and to support debt recovery and debtor tracing, with the aim of promoting responsible lending.
• The UK finance industry established the Steering Committee on Reciprocity (SCOR) to establish and maintain documented guidelines on the use and sharing of credit performance and related data on individuals.
• It is your responsiblity to make sure that there is regular monitoring in place to comply with the Principles.

Putting into Practice

The intention of SCOR is to ensure that all companies that use and/or subscribe shared data undertake to follow the Principles of Reciprocity, on the basis that “subscribers [a credit union for example] receive the same credit performance level data that they contribute, and should contribute all such data available”.

You should ensure that compliance with the Principles of Reciprocity forms a part of your own internal audit procedures.

SCOR, through the credit reference agencies, will seek confirmation of compliance with the Principles of Reciprocity from each data sharer or user.

You must inform your members that some of their personal credit performance information will be shared about them if they apply for credit.

Principles of Reciprocity in detail

The governing principle is:

• Data is shared only for the prevention of over-commitment, bad debt, fraud and money laundering, and to support debt recovery and debtor tracing, with the aim of promoting responsible lending.

The general principles of credit performance data sharing are:

• Data provided for sharing purposes must meet legal, regulatory and voluntary code of practice requirements before prevision and in use. Subscribers must use data only for purposes for which the required form of consent has been given.
• Data will be shared on the principle that subscribers receive the same credit performance level data that they contribute, and should contribute all such available data. Data must be used or made available by the credit reference agencies only in ways permitted by these Principles.
• Subscribers must never use shared data to target any customers of other specific subscribers.
• Shared data must not be used to identify and select new prospects.
• Subscribers have responsibility for regular monitoring to ensure compliance was the Principles, and the quality, completeness and accuracy of data supplied.

SCOR is a self-regulatory cross industry forum consisting of representatives from CML, British Bankers Association, the Finance and Leasing Association, the Mail Order Trade Association and the Consumer Credit Trade Association, together with representatives from the credit reference agencies (CRAs) Experian, Equifax and Callcredit. It is responsible for the administration and development of the data sharing rules. SCOR operates on behalf of the trade associations that it represents and can only make recommendations on matters concerning the Principles of Reciprocity to those associations; it has no powers of its own.

Subscribers are credit businesses, e.g. credit unions, that access and/or use data. You must contribute the same level of data which you use. For different types of subscription see the SCOR Principles of Reciprocity document available at: http://www.scoronline.co.uk/key-documents.

The Principles cover 2 types of actions:

Outbound – proactive attempt to obtain information or promote services made by the credit union

Inbound – a request by a member for any product or facility.

Data must not be used to target members for marketing of new products; but certain types of data about a member’s credit performance can be used to exclude members from marketing information. For example if a member is in at least 3 months arrears or the relationship with the member has broken down this information can be used to make sure they do not receive marketing information about new products the credit union is offering.

As a result of the Representation of the People Act, you may no longer use the full electoral register to “clean” existing marketing lists of members that are no longer at an address; instead SCOR permits shared data to be used to remove members from marketing lists, but does not allow the list to be changed, or enhanced, in any other way.

Further Information

Please see the SCOR website: http://www.scoronline.co.uk/.

The Principles of Reciprocity document provides an extensive question and answer section and is available at: Link to PDF.