BIIA survey reveals the extent of actions taken to ensure the integrity of the credit reporting industry during and after the COVID 19 pandemic
Credit reporting is widely recognised as one of the three key pillars that support the sustainable growth of an economy. Maintaining the integrity of the data in the credit reporting system during the COVID 19 pandemic is therefore paramount in assisting with the recovery from the expected global recession that will follow.
Having access to reliable credit information will be key to be able to provide sustainable finance to both consumers and businesses. If lenders and other credit providers are faced with inadequate or untimely data this will dramatically reduce the reliance placed on credit reporting data, possibly leading to credit rationing, increased costs and exclusion of borrowers.
To gain an understanding of how regulators and policy makers and the industry itself are reacting to the massive disruptions the pandemic is having on credit granting and credit reporting, BIIA has undertaken a survey to understand what is happening in the following key areas:
- Guidance issued by regulators and supervisors on the treatment of credit information
- Actions being undertaken within the credit reporting industry
- Operational resilience of the industry
28 Organisations from 24 countries responded to the survey. The following is a summary of the key findings:
The survey confirms that there is a large amount of activity taking place by both regulators and the industry to protect the impact of the pandemic on consumers and SMEs whilst at the same time ensuring the long term credibility and sustainability of the credit reporting infrastructure. However it is clear from the results of the survey there is still further work required.
From the information provided in a large number of cases the credit reporting industry appears to already have in place the necessary tools to allow the continued reporting of data whilst ensuring there is minimal or no effect on the consumers/SMEs credit history and score. They also appear in a large number of cases to have in place the infrastructure to handle the consequences of the pandemic, ensuring the integrity of the credit reporting system.
Guidance issued by regulators and supervisors
- 57% of organisations stated guidance had been issued on the continued full (file) sharing of credit information and on the creation of measures to monitor that negative payment information reported during the crisis does not overly impact on the credit risk scores of data subjects.
- Less than half (46%) stated guidance had been issued on the consistent interpretation and application of credit reporting data by credit providers and participants in the credit reporting system.
- Over two-thirds (70%) of respondents stated that enhanced consumer and financial literacy programs had been put in place such as advising borrowers to approach credit providers to negotiate payment deferrals and/or restructuring of facilities.
- 75% of respondents confirmed that a solution has been agreed (either with the regulator or within the industry) to reflect the impact of the pandemic on loans or other credit facilities to show agreed restructuring, deferred payment or non-payment how will it be implemented.
- Two thirds (66%) confirmed that the agreed solution was already available. The most popular solution was the use of codes.
- 8 out of 10 organisations have instigated their business continuity plan (BCP) as a result of the pandemic to ensure they continue to support the credit industry
- 92% believe that they will be able to handle additional consumer complaints and inquiries which are expected as the pandemic evolves.
To download a copy of the survey, please click on this link: TREATMENT OF CREDIT REPORTING DATA DURING A PANDEMIC Survey Results_final version_110520WEB2
BIIA would like to thank the International Finance Corporation (IFC) for their input into the design of the survey. We would also like to take this opportunity to thank those organisations that took the time to complete the survey and by doing so allowing us to develop this valuable insight.
BIIA is closely monitoring the impact of COVID 19 on the information industry and would be keen to receive updates from members and others including any analysis undertaken to show the impact of the pandemic.
If you have any questions about the survey, would like to share any analysis or would like to discuss anything else regarding COVID 19 and the treatment of credit reporting data please contact Neil Munroe, Deputy Managing Director, @ [email protected] or Peter Sheerin, Member of the Executive Committee @ [email protected]