Nicola RadfordFCA has set out its initial findings from a credit information market study in an interim report and discussion paper and its annexes. The study was launched because of concerns about the quality of credit information, strength of competition and consumer engagement and understanding. For example, research has indicated that 47% of borrowers in financial difficulty mistakenly believed that merely contacting lenders would have an adverse impact on their credit file.
The discussion paper highlights the importance of FCA’s strategic outcomes of fair value, suitability and treatment, and access for customers – particularly amidst the cost of living crisis. Some elements of the market have been found to require updating, such as governance arrangements which were set up in the 1990s. Other issues include high barriers to entry into the market, difficulty in switching between CRAs, and poor consumer understanding of credit information.
FCA now aims to reform industry governance arrangements, improve quality and coverage of credit information, enable greater competition and innovation, and support customers to access and dispute credit information. To achieve this, the market study proposes a range of improvement measures, including:
- establishing a new, more representative and accountable industry body to oversee arrangements about sharing of credit information;
- improving the quality, accessibility and coverage of credit information;
- enabling greater competition and innovation through potential changes to data access arrangements and more timely data reporting; and
- simplifying ways for consumers to access their credit file and dispute any inaccurate information held about them.
The consultation is open for feedback on the report and the proposed remedies until 24 February 2023. Responses can be submitted via FCA’s online form.
