Credit reporting: Interim Working Group (IWG)

Report One

The IWG hosted its first large event to engage with data users and contributors at the FCA’s London office on 26 March 2024.

The focus of the event was to share progress to date on the work of the IWG, validate key content in the first report and seek input on central subjects in the second report.

The event was attended by 50 participants representing mainstream and alternative lenders, trade associations, partner regulators, the Treasury and some of the IWG members.

The FCA opened the event by outlining the state of the credit information industry and its expectations as outlined in the Credit Information Market Study (CIMS) final report. The participants provided feedback on the proposed Credit Reporting Governance Body (CRGB) purpose, which showed 89% of the attendees either agreed or strongly agreed with the core purpose. Feedback highlighted the need to clarify the term 'all stakeholders' and make sure consumers were specifically mentioned.

The attendees also considered the 3 proposed CRGB objectives which received strong support. In all, 98% of the voting participants agreed there should be an operational objective, 86% agreed a consumer objective is needed and 81% supported a future-looking objective.

Finally, break-out sessions delivered significant constructive input for the IWG to consider about the principles to be applied to the governance of the CRGB.

Feedback after the event from attendees showed that they valued the opportunity to influence the design of the CRGB.

A further data user and contributor event will be held later in the year. The next major event will be for consumers on 25 June 2024. Further details will be provided in the coming weeks.

Thank you to the FCA for use of their facilities, the IWG members for their support in running the event and, most importantly, the participants for their openness and contributions.

It is with great pleasure that I am writing this first communication to the Credit Information Market participants. I took up my role as Independent Chair of the Interim Working Group (IWG) on 2nd January 2024. The IWG was created to make recommendations to the FCA on the reform of industry governance arrangements. The reform to the governance is seen as a key precursor to many of the other potential remedies that are proposed in the FCA final report.

The IWG kick started their year with a meeting on 18th January. The minutes of the meeting can be found at the bottom of this page under ‘Group meetings’, minutes will be published for all future meetings. Being the first meeting, much of the agenda focused on what we need to do and how we plan to do it. The proposed approach has been submitted to the FCA for consideration as part of the sign off of the Terms of Reference. Additional detail on the workplan will be included with the publication of the Terms of Reference in the coming weeks.

The IWG members are keen to ensure the thoughts of as may parties can be captured as part of the governance effort. Feedback can be provided directly to IWG members, via [email protected] or during the industry events that will be held and published here in the coming months.

This meeting was the first of several discussions about the second stage report topics, set out in the revised Terms of Reference on page 12.

The meeting began with the Interim Working Group’s IWG’s Legal Sub-group sharing their thoughts about the preferred method of incorporating the Credit Reporting Governance Body (CRGB) as a legal entity. The current view is that the CRGB would likely either be a company limited by guarantee or shares. The members agreed to seek input from the external legal advisors hired by the IWG to confirm the position and validate discounted options, about which incorporation vehicle the IWG should recommend to the FCA in its second stage report.

There were also discussions around governance principles, with a particular focus on the CRGB’s board structure. Further debate is needed on this topic, so the IWG Secretariat will be seeking individual written submissions from all IWG members about their views in the next few weeks.

Funding of the CRGB was also discussed. Initial views were shared, particularly around funding principles and what types of organisations would be expected to contribute to the funding of the CRGB. Potential funding models were also debated, with some members expressing an initial preference for a tiered membership model.

However, it was agreed that both the funding and governance models need to be explored in more detail before any substantive decisions can be made by the members. Therefore, the IWG Secretariat will work closely with the IWG’s Financial and Legal Sub-groups in advance of the next IWG monthly meeting to prepare in-depth proposals for further debate.

The members agreed and signed-off the first stage report sent to the FCA on 12 April and published on the IWG landing page on 16 April. The members will seek feedback on the first stage report with their cohorts and share this with the IWG’s Independent Chair and Secretariat team within the next month.

The next IWG monthly meeting will be held on 9 May at UK Finance’s offices in London. 
 

The meeting continued work on the First stage report topics, set out in the revised Terms of Reference (page 10).

Significant progress was made and there was agreement about the Credit Reporting Governance Body’s (CRGB’s) purpose and objectives. The single sentence purpose will be complemented by three objectives:

• operational
• consumer
• future looking

The members expressed strong views about focussing the CRGB’s consumer objective on enhancing financial inclusion alongside wider consumer outcomes.

They also discussed and finalised the principles that would define the role of the CRGB. The scope of the roles was debated in more detail, with a particular focus on the scheme and any educational and/or policing role that the CRGB may be expected to play. IWG members were keen not to completely rule out roles that may be needed in the future.

There was debate about the types of datasets that will be relevant to the CRGB. An important distinction was drawn in terms of what data the CRGB may:

• govern directly
• have an interest in, as part of its wider role and remit

Before this meeting, 4 IWG sub-groups were set up with members focussing on the legal, financial, operational and engagement topics that the IWG needs to cover as part of its 9-month workplan as set out in the revised Terms of Reference.

The IWG’s engagement plan has been finalised and the secretariat team has already begun connecting with government and relevant regulators about its work. The IWG will soon host its first large event to engage with data users and contributors at the FCA’s London office on 26 March.

The next IWG meeting will be held on 11 April at the Finance and Leasing Association offices in London.

This meeting was the first of several discussions about the proposed content of the IWG’s reports to be published and submitted to the FCA.  

This meeting focused on the first stage report (as set out in the revised Terms of Reference). Discussions were held about the potential purpose of the Credit Reporting Governance Body (CRGB), the stakeholders likely to be involved or impacted by the CRGB’s future work and the remit of the CRGB.  

The members agreed that CRGB should have a social purpose. It became clear that all were keen to place consumer outcomes at the forefront of the CRGB’s focus, alongside its role in supporting the effective sharing and use of credit information and related data.  

Before this meeting, members and secretariat developed detailed workplans for the first two reports and members took responsibility for delivering specified aspects. 

A communications plan has been developed, and will soon be finalised, to make sure the IWG engages effectively with industry including those cohorts not represented directly by the group. 

The next IWG meeting will be held on 14 March at the TransUnion offices in London. 

The IWG formally convened on 18 January under the auspices of the Independent Chair. The IWG discussed proposed updates to the Terms of Reference published on the 5 December 2023 alongside the CIMS final report. In addition to reordering of outputs, the main change was the addition of a transition plan, from SCOR to CRGB, which will be subject to agreement with the SCOR membership. The group also discussed the inclusion of 2 addendums.

The first addendum covers the roles and responsibilities of the independent chair, secretariat team and members.

The second addendum covers the workplan and proposed timings for the publication of the IWG’s recommendation reports to the FCA as well as provisional dates for events to engage with wider industry.

The members agreed on the content of the addendums with suggested changes which provide greater clarity on responsibilities and sequencing of activities. Agreement was also reached on the updating and publication of the revised Terms of Reference. The FCA subsequently approved and signed-off on the revised Terms of Reference.

The IWG also discussed ways of working, including determining the locations for future meetings and industry events. The members agreed to prioritise, ahead of the next meeting, developing detailed workplans for the first two reports and assigning members responsibility for delivering on specified aspects of these workplans. The members also agreed to begin to develop a communications plan to ensure the IWG engages effectively with industry, particularly those cohorts not represented directly by the group.

The next IWG meeting will be held on the 8 February at the FCA offices in Stratford, London.

The IWG seeks to ensure transparency of its efforts. You can see updates of the IWG’s work, including events being held, on this webpage.

The Credit Reporting Governance Body, (CRGB) is the provisional name for the future governance body for the Credit Information Market. It will represent the interests of lender organisations, trade bodies, consumers and regulators.

The FCA Credit Information Market Study final report, published in December 2023, said that the industry governance arrangements need to be more agile.

The report also said that the proposed change will allow the organisation to more effectively respond to the evolution of the market and technology.

The IWG will only work on the governance remedy. The reform to the governance is seen as a key precursor to many of the other potential remedies that are proposed in the FCA final report. The IWG does not have a mandate to advance other remedies.

SCOR is the current governance entity and will continue to operate until a transition to the CRGB has been completed. IWG does not replace SCOR. IWG operates in parallel to SCOR with a different mandate.

CRGB will form the future governance for the Credit Information Market and a transition plan from SCOR will be delivered as part of the recommendations to the FCA.

The FCA and IWG outlined the scope and operational expectations of the IWG in their Terms of Reference. 

The FCA confirmed IWG membership to ensure a wide representation, appointed the independent chair to the IWG and provides secretariat support.

Feedback can be provided directly to IWG members, via [email protected] or during the industry events that will be held and published on this webpage in the coming months.

The IWG members are keen to make sure the thoughts of as may parties can be captured as part of the governance effort as possible.

IWG is an advisory body with no decision-making powers. It will make recommendations to the FCA on the design, implementation and operations of the new CRGB.

Any extension beyond the IWG’s 9 month programme, which started in January 2024, would need the approval of the FCA.

The IWG will work in a phased approach and has specific milestones to reach when reporting to the FCA.
 

Any recommendations to the FCA should have unanimous support among the IWG members.

Where this is not possible, the Chair should provide recommendations on a way forward and a ranking of options informed by the IWG’s discussions and based on the Chair’s own analysis.

Remedies taken forward through FCA rules will be subject to normal FCA consultation processes. Find out more about updates on CIMS.

The CIMS outlined a package of remedies categorised into 3 distinct types:

• FCA-led
• Industry-led
• Joint FCA and industry remedies (ie the CRGB)

The joint governance remedy is the first to be advanced. The reformed industry governance arrangements will be responsible for facilitating the thinking, development and implementation of the industry-led remedies. 

The FCA-led remedies will be advanced in parallel, with the remedies to improve data quality prioritised. The first steps will be to progress towards a consultation paper on rules for mandatory data sharing by the end of 2024.

The IWG recommendations to the FCA on the future governance arrangement will include a transition plan from SCOR to CRGB. This plan will include responsibilities and timing which will be agreed with the members of SCOR.