Expanding the credit reporting database. The Dutch example

Transcription

1 Expanding the credit reporting database The Dutch example Joop Lobstein Executive director BKR, Netherlands Kennismaking met Bureau Krediet Registratie

2 BKR Founded: 1965 Objectives: To avoid insolvency by borrowers To prevent risk for lenders Available Information: Positive and negative Kennismaking met Bureau Krediet Registratie

3 Dutch market for consumer credit (EIM research September 2007) 2006 (x1000) Consumer credit (incl credit cards) Overdraft on normal accounts Kennismaking met Bureau Krediet Registratie

4 Risk Consumers (EIM research September 2007) Risc groups % No risk 59 Low risk 27 Increasing risk 9 High risk (overcredited in fact) 5 Kennismaking met Bureau Krediet Registratie

5 Top-ten creditors in debt package (EIM research September 2007) 1. Banks/Finance Houses etc Tax authorities 9 3. Telephone companies 8 4. Power companies 8 5. Health insurance 8 6. Holliday/relaxation 7 7. Local/municipal authorities 6 8. Housing society s 6 9. Mail order companies Medical care 4 Kennismaking met Bureau Krediet Registratie %

6 Data from Mobile Phone Companies In 2000 BKR takes the decision to add data from Mobile Phone Companies. After more than one year of consult together with the Dutch Mobile Phone Operators the operation starts in Kennismaking met Bureau Krediet Registratie

7 Data from Mobile Phone Companies The information contains: Positive and negative information Every post paid contract will be a positive registration in the database Arrears are registered negative Data quality must be at the same level as all data about consumer credit loans Kennismaking met Bureau Krediet Registratie

8 Data from Mobile Phone Companies Which information do the Operators get : Positive and negative information about all post paid subscriptions Limited information about consumer credit (all negative information + limited positive information) Kennismaking met Bureau Krediet Registratie

9 Data from Mobile Phone Companies Which information do the Financiers get : Positive and negative information about all post paid subscriptions Kennismaking met Bureau Krediet Registratie

10 Development of data in BKR database (BKR annual reports) Year running contracts (x1000) Kennismaking met Bureau Krediet Registratie

11 Sort of Credit (BKR annual report) % % % % % Revolving credit Closing/expiring credit Remaining (e.g telecom) Kennismaking met Bureau Krediet Registratie

12 Data from other creditors In 2005 an initiative was taken by: Housing corporations Power corporations The Salvation Army Local/municipal social security funds Dutch Banking Association Dutch Association of Finance Houses Dutch Association of Public Credit DSB Bank Dutch Association of Home Shopping Organisations Kennismaking met Bureau Krediet Registratie

13 Data from other creditors They wanted to expand the existing credit information with new negative data about: Arrears from Power Companies Arrears from Housing Corporations Arrears from loans given by the Salvation Army Arrears from the Local/municipal social security funds Kennismaking met Bureau Krediet Registratie

14 Data from other creditors At the end of 2005 BKR was asked to support this initiative and to advise the initiators on technical matters. At the same time the government in particular the ministry of finance gave strong political support on the initiative. Together with the initiators BKR started to make a plan for the expanding of the database Kennismaking met Bureau Krediet Registratie

15 Data from other creditors Plan Fase 1: Make a blueprint of the information system Fase 2: Make an action plan Fase 3: Make a final busines case and a businessplan Kennismaking met Bureau Krediet Registratie

16 Data from other creditors Blueprint Together with experts from the initiators the databasestructure and the database content was developped: Data to be registered Registration rules Protocols for arrears Privacy concequences to be discussed with the privacy authorities Technical interfaces between facilitator (BKR) and participants/initiators The blueprint was ready and approved in May 2006 Kennismaking met Bureau Krediet Registratie

17 Diagram Other Creditors (LIS) and Central Credit Information System (CKI) a1: Participants must register (arrears) and must/are allowed to consult the data from LIS LIS CKI a2: Participants must register (positive system) and must/are allowed to consult the data from CKI (a1) (b1) (b2) (a2) b1: Participants are allowed to consult data from LIS Participants LIS Participants CKI b2: Participants are allowed to consult negative data from CKI. Kennismaking met Bureau Krediet Registratie Thursday, October 23,

18 Data from other creditors Actionplan After approval and based on the blueprint BKR made a integral actionplan: Plan for the devellopment and the technical specifications of the database and the intefaces Plan for the consultation of the Privacy Authority Plan for the organizational design Plan for the governace Plan for the juridical design Plan for the actual connection and the support of the induvidual participants (housing corporations, power company s) The actionplan was ready and approved in August 2006 Kennismaking met Bureau Krediet Registratie

19 Data from other creditors Business case and business plan Based on blueprint and actionplan BKR made a businesscase and a business plan: Investments Operational income and expenses Pricing Pay back period Risk analysis and financial security Time schedule for completion The discussions and negotiations about the business case and the business plan took much time. It was approved in July The final contract was signed in April 2008 Kennismaking met Bureau Krediet Registratie

20 Data from other creditors Expectations Increase of (negative ) data: Arrears from Power Company s Arrears from housing corporations Arrears from the salvation army Arrears from the Local/municipal social security funds Totaal Kennismaking met Bureau Krediet Registratie

21 Data from other creditors Expectations Increase of (negative ) data: Increase of enquiries per year: 6 milj. - 8.milj. Decrease of problematic debts because of: Early warning Better predictive scoring More effective risk evaluation Better payment behaviour of consumers Kennismaking met Bureau Krediet Registratie

22 THANK YOU VERY MUCH Joop Lobstein Executive director BKR, Netherlands Kennismaking met Bureau Krediet Registratie