The credit reference industry has won a landmark victory at the Court of Appeal, overturning a ruling which threatened to open up the floodgates to millions of pounds in compensation payouts.
The issue centres on a case brought against Equifax by former bankrupt Keith Smeaton, who last year won £500,000 in compensation after a judge ruled Equifax had failed to keep accurate data on him.
Equifax’s file showed he was still bankrupt – even though this had been rescinded – and had prevented him from securing bank facilities for his new business.
But while insolvency legislation requires bankruptcy notices to be advertised in the London Gazette, it is up to be individual to advertise the fact that this has been rescinded – which is subject to a fee – or tell credit reference firms.
A judge originally ruled that Equifax had acted in breach of the Data Protection Act (DPA). He said credit reference agencies assumed responsibility for consumers’ personal data under the common law; a decision which could have led to a barrage of compensation claims.
But this week Lord Justice Davis overturned the ruling, maintaining individuals had a duty to inform credit reference agencies of any change in bankruptcy circumstances.
Under the DPA, organisations are required to ensure that personal data they store is “accurate and, where necessary, kept up to date”.
However, the Act states that organisations that obtain personal data records from third parties should not be considered to be in breach of that principle if the information is inaccurate as long as they had taken “reasonable steps to ensure the accuracy of the data”.
Because Equifax had monitored the Gazette and had updated its records when notified by Smeaton, the Court ruled it had acted in accordance with data protection laws.
