Credit reference agencies are commercial companies that compile information from a number of different sources.
They sell this information to lenders and other service providers in the form of credit reports which help them to decide whether to grant an application for a loan, credit card, or provide another financial product.

Private firms, such as lenders and other service providers can currently (for a fee) get access to an individual's 'credit reports' when an application is made for a credit card or loan etc to make sure they are not defrauded
The government is arguing there is no reason it should not also be able to draw on such data.

All such agencies stress that they are bound by data protection legislation and that this is very strictly adhered to so, in order to get access to more detailed records, central government and local authorities must show that they have a reason to suspect somebody is fraudulently claiming a benefit.

also from the BBC Aug 10 News site


The DATA PROTECTION ACT applies to personal information and ensures that it is handled properly
It also gives the right to know what information is held about you and the right to correct information that is wrong.
You also have the right to claim compensation through the courts if an organisation breaches the Act and this causes you damage, such as financial loss. If it has, you can also claim for distress.

The FREEDOM OF INFORMATION ACT deals with official information held by public authorities in England, Northern Ireland and Wales and to those which are UK-wide.
It gives anyone the right to request official information held by public authorities, unless there are good reasons to keep it confidential.
for example How many toilet rolls were used in No 10 during Tony Blair's administration?

more about the FOI