Baycorp's database charge opens way for rival

By CHRIS DANIELS

A heavyhanded Baycorp Advantage has driven a group of its suppliers into the arms of competitor Dun & Bradstreet.

Some of New Zealand's main debt collection companies, incensed at treatment by Baycorp, are setting up their own database of bad debtors. The name Credit Data Ltd has been reserved and the internet-based service could be running within weeks.

Dun and Bradstreet, an international credit agency, is keen to run the new database, and talks are continuing.

Many collection agencies stopped supplying Baycorp with debtor information more than six months ago, when it started demanding a $5 fee. Baycorp said the charge was justified because debt collectors used the database to force debtors to pay but did not update it once the money was paid.

That meant 90 per cent of the information they provided was inaccurate, undermining Baycorp's integrity.

Dun and Bradstreet has long been promising a competing service, and last year's decision to charge debt collectors may have helped deliver it a ready-to-use database of debtors.

Baycorp says that the new database is no threat to its business, that it involves only a few companies, and that it is better off without their information.

Speculation about the entry of new rivals has in the past caused big falls in Baycorp Advantage shares.

John Campbell, director of Law Debt Collection, of South Auckland, said the new database could be live in four weeks.

He had 20,000 default notices that had not gone to Baycorp and would be loaded onto the new system.

Campbell said Baycorp's database was deteriorating as tens of thousands of default notices piled up in debt collection offices.

These would be used to set up the rival database.

He said the declining integrity of the Baycorp database meant that non-creditworthy people were being approved for credit.

Baycorp said in April that of the 117,000 debt defaults lodged in the past financial year, nearly 31,000 came from debt collectors.

The owner of East Coast Credit Control, John Harrison, said: "I cannot believe that the board of Baycorp Advantage would condone the actions of their New Zealand management."

For the sake of the $250,000 Baycorp would have earned from its $5 levy, it had driven away an important source of information and eased the way for a competitor.

But the actual impact on Baycorp has been questioned by UBS Warburg analyst David Roberton.

He said that default information such as that held by the debt collectors was only a small part of the whole business, which relied on information going from customers, to Baycorp, then back to customers.

While this did not mean the new venture would fail, it was unlikely to seriously challenge Baycorp and could just increase the market for consumer credit information.

Big clients would need a lot of convincing before taking their business elsewhere.

Baycorp managing director Keith McLaughlin said the integrity of the database had improved since the debt collectors had stopped providing the information. He said that about 90 per cent of their information had been inaccurate.