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Treasury competition seeks to liberate rent payment data to help consumers obtain mortgages


The UK government has offered a total of £2 million in funding to financial technology companies that can develop digital applications that allow consumers to share their rent payment data with credit reference agencies and lenders.

The Rent Recognition Challenge is aimed at helping consumers in the rental market use their rent payment data to obtain mortgages.

Economic secretary to the Treasury, Stephen Barclay, said: "People’s monthly rent is often their biggest expense, so it makes sense for it to be recognised when applying for a mortgage. Without a good credit score, getting a mortgage can be a real struggle. Most lenders and credit reference agencies are unable to take rental data into account, because they don’t have access to it. The Rent Recognition Challenge will challenge firms to develop an innovative solution to this problem and help to restore the dream of home ownership for a new generation."

The Treasury's funding competition will open to applications in early 2018. It said six proposals will be selected for an initial grant of funding to help the companies turn their ideas into "a workable product". A second stage of the process will then see further funding and support given to "a handful of teams", it said. The selections will be made by "a panel of leading figures from the fintech sector".

Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, who specialises in financial services and technology law, said businesses in the banking and fintech sectors are already busy developing open APIs to help liberate data held by banks which could be used to provide innovative new services to customers.

"The Rent Recognition Challenge is essentially a non-legislative extension to the existing work being undertaken by industry under the Open Banking initiative and in preparation for life under the revised Payment Services Directive (PSD2)," McFadyen said.

"The Open Banking initiative, recently aligned with the broader scope of the PSD2 reforms, is designed to allow third parties to make use of the data held on payments accounts where customers consent to them accessing the data. In this respect there is a myriad of possibilities for the new services that might emerge onto the market. It is expected to spur greater use of money saving tools that involve aggregating financial data. It is also likely to encourage retailers, technology companies and utilities to develop innovative new ways for consumers to pay for services. The liberation of rent payment data is a further example of how the Open Banking market may evolve," he said.

Pinsent Masons, together with Innovate Finance, recently published a new report looking at the issues that the new world of Open Banking raises. The report features the results of a study into attitudes towards open banking carried out with industry experts, as well as answers from interviews conducted with banks and fintechs, as well as analysis of the trends in the market.

According to the report, industry experts believe collaboration between banks and fintechs will be at the heart of the future of Open Banking.

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