Dispute over loan database scheme

ALL individuals who take out loans of any sort would be listed on a central database under proposals being discussed by MPs.

Lenders can currently check a Bank of France database of people who have had repayment difficulties before offering a loan. However the proposed database would encompass all loans taken out by each person (on a house or car etc). This fichier positif would also include details of shop credit cards.

The idea is to allow lenders to better evaluate a borrower’s ability to pay a loan back and avoid heavy debt but it has been criticised as an invasion of privacy.

Cresus, a debt advice association, supports the plan. Association president Jean-Louis Kiehl said it would stop people taking out too many loans and help others excluded from loans to get them. “Lenders base decisions on factors like salary or whether you have a permanent work contract. They think there’s a risk those on low pay would take too many loans. This database would give a new way to assess the risk,” he said.

However a spokewoman for consumer body CLCV, Reine-Claude Mader, said it was unnecessary. Banks could already see if the person had had payment difficulties and they had access to details of loans given by themselves or partner firms.

“A lot of people have no problems with repayments so it is inappropriate to create files on everyone. Also, banks might use this database to get a picture of your profile to market other products to you. It is a matter of protecting personal data - people don’t like to see it used in databases.”

She said a better solution to debt would be for less use to be made of revolving credit (eg. shop cards with high interest rates where you can make repeated new purchases). It was preferable to give specific loans for specific purchases, at lower rates.