The Financial Conduct Authority (FCA) has proposed changes aimed at ensuring credit files more accurately reflect people’s financial situations.
These proposals are part of efforts to enhance the data quality used by credit reference agencies (CRAs) for lending decisions and to increase market competition.
In response to its findings from a 2022 interim report, the FCA’s plans include requiring regulated firms to share credit information with CRAs, introducing a standardised format for data reporting to promote consistency, and giving consumers more control over their credit information, particularly regarding non-financial vulnerability.
Sheldon Mills, executive director for 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.”
The FCA also announced the formation of an Interim Working Group, which will be responsible for setting up a new governance body for credit reporting, to be more inclusive, transparent, and accountable. The group is set to begin its work in January and aims to deliver within nine months.
Jackie Keogh, with over 30 years of experience in the financial industry, has been appointed as the chair of the working group.
She will leave her senior advisory position at the FCA before assuming this new role.
The FCA expects to consult on further measures, such as mandatory reporting requirements, by the end of 2024.
