The Equifax Financial Stability Exchange is a database to provide consumer lenders with declared and verified income data.
The data will be part of the Equifax Financial Stability product suite offering, to be launched later this month. The income data will be accessible as an integrated component of application and customer management process, cutting out the need for additional income verification.
A range of organizations will be invited to use the data-sharing software including mortgage providers, peer-to-peer lenders, building societies and insurance companies as well as leasing and motor finance companies and professionals.
According to Equifax, the new offering will also help businesses to comply with the latest guidelines from the Officer of Fair Trading and Financial Services Authority; in particular the Responsible Lending and Treating Customers Fairly requirements, which necessitate credit providers’ active verification that the individual will be able to meet their payment commitments.
BIIA Comment: The announcement that Equifax launched the Financial Stability Exchange in the UK, enabling lenders from various sectors to share information regarding income declared on loan application forms by consumers and verified income is an interesting development. Sharing income declared on loan application forms by consumers is not a new development, it has been available for a number of years in the UK. However declared income is notoriously unreliable when it comes to reflecting a consumers actual income and models built by the CRAs using this data have been of limited use to the lenders. What is interesting with this development is that it appears that Equifax will also be storing an indicator of whether the income has been verified or not. if this is the case the proposition becomes much more powerful. It will take time to build a database that has multiple income references per consumer but ultimately if Equifax are successful, they should be able to provide strong income verification models in the UK. These in turn will enable UK lenders to fulfil their responsibilities in treating customers fairly and lending responsibly ensuring that their customers not only have the intent to pay but also the ability.
I don’t expect Experian and Callcredit will have missed this opportunity, both have already got income models based on loan application data and other sources, it will be interesting to see how they respond to this announcement from Equifax. Yet another good example of how the CRAs are expanding their model of industry data sharing to address a specific industry need.”
Commentary provided by Phil Cotter on the BIIA Network Group on LinkedIn