FCA new proposals aim to ‘improve competition’ and credit information quality
The UK’s financial watchdog released its report today with proposals aimed at improving the credit information market.
The Financial Conduct Authority (FCA) has ramped up against credit reference agencies (CRA) in recent weeks. The FCA has been critical of its concern that lenders have been issuing unaffordable loans recently that are based on patchy information.
The FCA published an interim report back in November which found that the credit information market was working well in a number of ways. However, there were several areas where the market could be working better.
Its proposal today sees it requiring FCA-regulated data contributors, such as lenders, to share credit information with CRAs. It also wants to introduce a common data reporting format with an aim to enhance consistency across CRAs and promote competition.
Today’s report also highlighted the FCA’s proposal to provide greater control for consumers over how they are viewed by making it easier for consumers to record non-financial vulnerability information.
Along with its report, the FCA has also set up a new credit reporting governance body known as the Interim Working Group. Senior advisor at the FCA Jackie Keogh has been appointed as the chair of the working group, and she will step down from that role before taking up her new position.
The report highlighted that the three large CRAs in the UK are Equifax, Experian and TransUnion.
The group will oversee many of the changes proposed and is expected to start its work in January 2024, with an aim to deliver in nine months.
The FCA expects to begin consulting on new measures, including the introduction of a mandatory reporting requirement, by the end of 2024.
Speaking on today’s report, Sheldon Mills, executive director of consumers and competition at the FCA, said: “Poor quality credit information can result in people being cut out of the credit market or taking on more debt than they can afford.”
“Our proposals aim to improve competition and enhance the quality of credit information as tech developments occur. These improvements will help deliver more effective lending decisions, particularly for consumers with limited or poor credit records, and support sustainable economic growth. The changes will also enable people to more easily challenge decisions when mistakes are made,” he added.