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FCA proposes credit file changes to improve lending decisions

  • 05/12/2023
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FCA proposes credit file changes to improve lending decisions
The regulator has put forward changes to the way credit information is collected to support lending decisions and competition in the market.

The Financial Conduct Authority (FCA) has proposed that data contributors that are regulated by the authority, including lenders, should share customer credit information with credit reference agencies (CRAs). 

It also wants to introduce a common data reporting format to encourage consistency and promote competition. Additionally, the regulator wants to give consumers more control over how they are viewed so it is easier to record non-financial vulnerabilities. 

This follows a report published by the FCA last year which found that although the credit information market was effective in some ways, there were areas for improvement. 


Poor credit info cutting people out

It released a final report today and has established an interim working group to create a credit reporting governance body. 

The body is designed to be inclusive, transparent and accountable and will be responsible for implementing the proposed changes. The interim working group will start its work in January over a nine-month period. 

Their mandate will be temporary and advisory, meaning the group will have no decision-making powers. However, it will make recommendations to the regulator about how the credit reporting governance body should operate and be introduced. 

The FCA has appointed Jackie Keogh as the chair of the working group. She has over 30 years of experience in the financial sector, particularly in corporate banking, and has been a senior adviser at the FCA since 2020. She will step down from this role before taking up her position as chair. 

The FCA will consult on the new measures by the end of next year and introduce a mandatory reporting requirement. 

Sheldon Mills, executive director, 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.” 

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