Financial Watchdog Sets Credit Information Market Improvements
Summary
Under proposed rule changes, the FCA says people will find their credit files better reflect their financial circumstances. The regulator is seeking to improve the quality of information collated by credit reference agencies (CRAs), which is used to inform lending decisions, as well as boosting competition.
In November 2022, the FCA published an interim report which identified a number of areas where the market could be working better. One concern was the significant inconsistencies in the data used by different CRAs. Another was that consumers were unsure how to access and dispute credit information.
The FCA says its new proposals will:
• Require lenders and other FCA-regulated data contributors to share credit information with CRAs
• Introduce a common data-reporting format to promote consistency across CRAs and competition
• Give consumers more control over how they are perceived, by making it easier for them to record non-financial vulnerability information.
The FCA also announced the terms of reference for an Interim Working Group that will establish a new credit reporting governance body, designed to be more inclusive, transparent and accountable. This body will be responsible overseeing many of the changes proposed. The FCA expects the working group to start its work in January next year, and deliver within nine months.
Jackie Keogh, who has been appointed as the Chair of the Working Group, has more than 30 years' experience in the financial industry, mostly in corporate banking, and has been a senior advisor at the FCA since 2020. She will step down from that role before taking up her new position.
By the end of 2024, the FCA expects to have begun consulting on new measures, including the introduction of a mandatory reporting requirement.