A new digital database will put every detail of people’s financial affairs in one place – and the Government, financial services industry, Google and Microsoft are all understood to be involved
Every detail of people’s finances could be collated and stored in a digital “vault” under plans being developed by the Government, financial firms, Google and Microsoft.
In a move to make it easier to open bank accounts and Isas, people will be asked to share all of their accounts, tax records and personal details with a central service.
To check someone’s identity, a company would then ask potential customers a series of questions and check the answers against the information in the vault. The checks would replace the current system in which new customers must send by post copies of their passports, cross-signed by a friend, along with bank statements and utility bills.
A prototype for the new scheme, which is being called a “digital passport”, should be ready by the end of the year, industry sources say.
Privacy campaigners raised concern that storing so much information on an individual in one place would attract the most skilled cyber criminals.
Emma Carr, director of Big Brother Watch, said: “By its very nature this ‘vault’ will instantly become a honeypot for hackers intent on stealing our valuable information.
“With high-profile cyber attacks occurring on a regular basis, the public will rightly be concerned that their data could be compromised.”
Discussions are being held with two large technology firms, believed to be Microsoft and Google, about how the technology might be turned to into an app.
Individuals might have access to an online account showing how much debt and savings they have to their name in the form of mortgages, credit cards, pensions, Isas and current accounts. They would have to give the banks and insurers that run these accounts permission to share their details with the central service provider, which would most likely be an independent company.
Senior executives at investment firms believe that offering every adult a “one-stop” view of their financial life would encourage more people to save. If so, the new tool could help solve a looming pensions crisis that has been created by the death of generous “final salary” workplace pension plans and inadequate long-term investing by younger generations, they say.
Government officials are also understood to have been involved in talks about how the service might work. Sources who have been present in the meetings say the Cabinet Office is sympathetic to allowing people’s tax and benefit details to be transferred to the new vault.
If an agreement can be reached, the data service could eventually include: people’s address, phone numbers, tax details, where they are registered to vote, driving records and benefit claims, as well as information about their mortgages, pensions and bank accounts.
Ms Carr said storing such a large amount of information in one place had far-reaching implications. A hacker attack would make other high-profile data thefts such as the recent hacking of 2.4 million Carphone Warehouse customers pale in comparison, she said. It also raises questions about how the data might be used by financial firms, marketing companies – and even the Government itself.
“At present, the public has little control over their data and given very little information about who has access to it and for what reasons.” she said. “If this project goes ahead, the public need to be given clear information about how their data will be used and how they can maintain control over it.”
The Cabinet Office is thought to be have retained its interest in developments as people’s digital vaults might provide an easier way to catch those avoiding tax or claiming benefits to which they are not entitled.
The plans are understood to have been driven by the Tax Incentivised Savings Association, a not-for-profit membership association operating within the financial services industry, and a subsidiary arm called The Savings and Investment Policy Project.
These trade bodies for the financial services industry are funded by 145 banks, insurance companies and other financial service providers.
In a document passed to The Telegraph, its policy arm says: “Whilst a simple authenticated ID could be very beneficial of itself, additional functionality can transform the combined application into a powerful tool.
“We refer to this as a Digital Passport and it would enable a consumer to manage many aspects of their savings including: opening of an account or purchasing a financial product more quickly and easily; transferring savings between providers; sharing information with selected third parties to assist in managing savings; maintaining up to date records with all providers.”
A member of the organisations insisted that the new tools would have the “highest levels” of data protection. It would be an “opt-in” service, they said, and people would always be asked permission before their data was accessed or used by a third party.
This article was written by Dan Hyde Consumer Affairs Editor from The Daily Telegraph and was legally licensed through the NewsCred publisher network.