No escape for credit flitters

Finance companies have set up a database to hunt debtors who move house and cause losses of £500m a year
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FRAUDSTERS who try to dodge their credit agreements by doing moonlight flits now face being tracked down by finance companies, which are determined to stem losses estimated at £500m a year.

The credit firms announced last week they had banded together to set up a database of debtors who move home without leaving a forwarding address.

More than 120,000 records are already on file, many of them multiple moonlight flitters. By January 1996, up to 675,000 records will be held on so-called "gone-aways".

The new database to tackle this form of debt evasion is part of an increasing drive by building societies, credit firms and insurance companies to unite in cracking down on non-payment.

Gone-away defaulters may now find themselves unable to get a mortgage. The Council of Mortgage Lenders has set up a separate register of people whose homes have been repossessed.

The repossession register, which now has 100,000 people on file, is run by credit reference agencies. They have also been charged with the job of putting together the new system.

Adrian Coles, director-general at the CML, said: "Our register is not a blacklist. But mortgage lenders would want to know any information about a person's ability to meet their mortgage obligations, including all other relevant financial details. Now t h at house prices are no longer rising and it is not possible to bail out without causing financial harm to lenders, they need to have that much more information about a borrower than they once used to."

Sue Wishart, a consultant at the newly-formed Gone Away Information Network (Gain), said: "There will be some people with multiple records of non-payment on the register. They are the big fraudsters, who obtain credit from several stores using different addresses. There are many more people who try to avoid paying by cancelling a hire-purchase agreement and moving home.

Ms Wishart said: "In the past, credit companies have found it difficult to track debtors down because of the expense involved and, after a time, they simply had to write off the debt.

"Whatever one thinks of the financial difficulties many gone-aways may be facing, the fact remains that they are increasing the cost of credit to others by their activities."

Until recently, gone-aways could escape their obligations because there was no central register of bad debtors. By giving a new address that went back over three previous years, applicants could get credit from a new company even when using their old name. "Our estimates are that about 35 per cent of bad debts come from gone-aways," Ms Wishart said.

A survey recently showed that three finance companies alone had lost a total of £19m in one year because of absconders.

The eight founding members of Gain, which include British Gas (North Eastern), Lombard Tricity Finance, Marks & Spencer Financial Services and Sears, cover some 10 million accounts. The register will be part of the normal credit reference process as wellas allowing member firms to track down bad debtors re-applying for credit.

Companies will put names of gone-away debtors on the register. Other firms can then check and supply the new address.

Ms Wishart said: "We are determined not to penalise those who inadvertently forget to tell their credit companies that they are moving. We do not put people on the register who continue to pay, and if a name is mistakenly put on we can take it off immediately."

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