FCA proposing new credit information industry body

It comes as the regulator has said it wants to see higher quality credit information so lending decisions “better reflect people’s underlying financial circumstances” and should help make sure that consumers are not denied credit they could afford or given credit they can’t afford.  

Following the conducting of its market study, the FCA has proposed a range of measures including the establishment of a new “more representative and accountable” industry body to oversee arrangements for sharing of credit information. It has asked the industry to set up this body in 2023, and will then work with the industry to agree on further improvements.  

It has also proposed an improvement in the quality and coverage of credit information, enabling greater competition and innovation through potential changes to data access arrangements and more timely data reporting. It also wants to simplify the ways that consumers access their credit files and dispute any inaccurate information held about them.  

Additionally, it asked credit reference agencies and those offering credit information to consider the proposals alongside the forthcoming Consumer Duty, to see if their processes and communications with customers could be improved.  

The FCA’s executive director of consumers and competition Sheldon Mills said: “It is vital that the credit information market works effectively for firms and consumers. 

“We want to see industry reform to help deliver the changes, but in the meantime, it is important consumers know how to access their credit information and talk to their lenders if they are facing difficulties. Our proposals will help consumers get better decisions from lenders and lenders to have confidence that the information they have access to is sufficiently comprehensive.”  

The proposals from the regulator follow a market study it conducted that found lenders are largely happy with the breadth of information they have access to, but there are differences in the information held by different credit reference agencies.  

Additionally, while 90% of consumers are aware of the existence of credit scores and files, the FCA’s borrowers in financial difficulty research revealed 47% of borrowers in financial difficulty mistakenly believed the simple act of contacting their lender would have an adverse impact on their credit file – with 16% ignoring contact from lenders as a result.  

Further research revealed that 43% of consumers did not realise they have a right to access their statutory credit report for free.