Credit reference agencies said that unless they could obtain details of an individual's payment records dishonest borrowers could benefit. The Data Protection Registrar says that such information cannot by law be made available without the customer's consent, unless it is in the public interest.
Nor should individuals be penalised by being denied credit if they refuse to let financial institutions, such as banks and building societies, provide information to the credit reference agencies.
David Hardisty, chairman of Finance & Leasing Association, the agencies' trade body, said: 'We would have to make credit decisions with one hand behind our backs. This cannot be the way to ensure responsible lending.'
Phil Boyd, senior compliance officer at the Data Protection Registry, said: 'In most cases, customers will give consent in order to obtain finance. But if they already meet lending criteria, they should not be automatically denied it if they say it is none of a reference agency's business.'