The General Data Protection Regulation (GDPR) rules come in to place in May 2018 and will govern how people’s data is managed, stored and transferred.
While the SMP admitted another wave of regulatory change could be disruptive, it expected it to overall be a positive for the industry.
The organization highlighted that the ‘right of data portability’ clause in particular would make it easier for people to transfer their data between service providers – provided it has been generated by themselves – and could result in a speedier mortgage application process.
“As customers find it easier to transfer their data between organisations, mortgage affordability checks could become streamlined and a whole lot easier,” said SMP head of operations Vishal Pandya (pictured).
“Furthermore, firms enlisted in the Financial Conduct Authority’s (FCA) regulatory sandbox are looking at mortgage affordability, so perhaps GDPR could form a pathway to move the industry forward.
“GDPR will make it easier to transfer data between service providers on request and seeks to protect against lock-in effects. Consequently, customers will be able to move around more freely and their data transferred without hindrance, thereby expediting the whole process,” he added.
The right of data portability only applies where data is processed by automated means and the person has provided consent to the data processing, so any information being transferred must therefore be in a commonly used format and be machine-readable.
This could prove a sticking point as legacy systems may not be compatible with the new software and data, however there is also hope that this will combine with adjustments from the Open Banking initiative to reduce friction within financial services systems.
However, overall Pandya believes this additional burden will prove worthwhile, especially in the longer term.
“In general, GDPR will give people greater access to any information stored about them, the legal basis behind it and the period of storage.”
“It will also ensure that firms cannot mix data for the provision of products or services with that used for marketing purposes,” he concluded.