To Score and to Protect? Big Data (and Privacy) Meet SME Credit Risk in the UK

Recent UK legislation facilitating the credit scoring of small and medium-sized enterprises using Big Data techniques and Open Data sources threatens to further hollow out information management norms and data subject rights enshrined in privacy and data protection law just as it is gathering unprecedented momentum in courts and on statute books across the EU.

After examining the economic rationale for such measures and their envisaged impact on the credit risk industry, we argue that the associated regulatory re-shuffling and privacy-related safeguards are highly unlikely to address adequately the serious accuracy, transparency, and accountability concerns of individual data subjects.

Would the effective, full enforcement of data protection principles and data subject rights really cripple the credit reference industry to the detriment of the nascent economic recovery, or is there a middle path and will the forthcoming EU General Data Protection Regulation provide it?