Nandy vows to get tough on credit scoring agencies and ‘poverty premium’

Labour leadership candidate Lisa Nandy is expected to announce “tough new regulations” to target credit scoring agencies and the hidden “poverty premium”.

Speaking at the party hustings in Peterborough, she will say that credit scoring companies are “increasing the costs of being poor”.

Nandy will explain how as Prime Minister she would bring in penalties for credit scorers that make mistakes and a right of reply for consumers denied credit.

The MP for Wigan is expected to say: “Credit scoring agencies can be the difference between getting a loan, renting a flat and even getting a job. But the industry is dominated by three players – and the tools they use are secretive and prone to error. These companies are increasing the cost of being poor with their ‘poverty premium’ and they must be reigned in.”

Responsible Finance estimated that the average annual cost per household of having a poor credit rating is £1,770 extra for basic goods and services.

The leadership candidate will say: “My Labour government would bring forward tough new regulations, that demand the use of fairer, inclusive assessment criteria; financial penalties for errors, and, a “your data; your call” right of reply that means banks must explain why you are refused credit – and give you a chance to appeal and correct, without penalty.”

A survey found that 57% of consumers in the UK were at risk of being turned down for credit, including a third in full time employment and a third earning over £50,000.

In April last year a report revealed that there were 1.2 million people in the country unable to open a bank account, including many because of a poor credit history.

The analysis found that this alone would mean an individual could end up paying an additional £485 per year for bills and services.

Nandy will be joined by rival leadership contenders Keir Starmer and Rebecca Long-Bailey for the hustings organised by the Labour Party.

Voting in the final stage of the leadership contest will take place from February 24th, online and by post, until April 2nd.

Nandy reached the ballot after securing nominations from 72 local Labour parties, as well as NUM, GMB, Chinese for Labour and the Jewish Labour Movement.

Rebecca Long-Bailey and Keir Starmer also have a place in the final vote, in which Labour members, affiliates and supporters will be eligible to take part.