FIN.

FCA sets out strategy for credit reference agencies and service providers

The FCA has published a portfolio letter to credit reference agencies (CRAs) and credit information service providers (CISPs) setting out its strategy for the next two years.

The priorities will focus on:

  • Embedding of the Consumer Duty:
    • Consumer support and understanding – the FCA is concerned that raising a data dispute or complaint can be difficult for consumers to navigate. It plans to investigate complaint practices across the portfolio and what actions firms have taken to improve outcomes under the Consumer Duty; and
    • Price and fair value – the FCA will continue to assess this outcome in relation to the different products and services, particularly credit repair, credit builder and subscription models.
  • Operational resilience – the FCA has found that firms need to better prevent, respond to and learn from operational disruptions. Its Operational Resilience Policy came into force on 31 March 2022, and requires in-scope firms to be able to demonstrate that they remain within Impact Tolerance for their Important Business Services in severe but plausible scenarios, by 31 March 2025.
  • Cyber resilience – the FCA asks firms to review systems and controls, oversight and monitoring arrangements to ensure they are sufficient to identify weaknesses and vulnerabilities. The regulator will continue to monitor firms’ capabilities in this area, including through the intelligence-led penetration testing scheme (CBEST).
  • Financial resilience – the FCA stressed the importance of regular reviews of capital and liquidity to ensure firms have the financial resilience to withstand a range of stress-tested scenarios, and reminded CRAs and CISPs of their obligation to submit the FIN073 baseline financial resilience report.
  • Credit Information Market Study (CIMS) – following the CIMS final report in December 2023 – which sets out both proposed new requirements to improve the quality of credit information, and industry-led remedies to be taken forward by the proposed new governance body – the FCA expects to consult on rules relating to mandatory data sharing, including cost benefit analysis and a competition assessment.

Laura Wiles