We have published the Final Report for the Credit Information Market Study. It contains our proposed package of remedies aimed at addressing concerns we identified in the market. We also set out feedback received from stakeholders in response to the Interim Report and Discussion Paper, issues raised, our response and proposed next steps.
Background to our market study
Credit information is a key factor in the effectiveness of decisions made by retail lending and wider financial services.
A well-functioning credit market supports our overall strategic objectives and Business Plan priorities. It supports improving consumer outcomes, protecting consumers, increasing market efficiency, and sustainable economic growth.
About our market study
In November 2022, we published the interim report. This set out our provisional view on the quality of credit information, strength of competition, extent of consumer engagement and understanding as well as the effectiveness of existing governance arrangements. We found:
- Characteristics that could be limiting the strength competition, including that the market is very highly concentrated, with high barriers to entry and expansion.
- Evidence of poor data coverage, quality, and consistency amongst participants.
- A general lack of awareness and understanding of credit information among consumers.
- Governance arrangements in the market appear slow to respond to changes in the market to allow for it to adapt in a nimble manner and lack the appropriate representation.
In December 2023, having considered feedback on the interim report and having engaged widely with a range of stakeholders, we confirmed our position on the proposed remedies outlined in our final report.
Our proposed remedies
In the Final Report, we propose a package of remedies:
- Data quality – improving the coverage, quality, and consistency of credit information to help deliver better outcomes.
- Consumer awareness and engagement – support for consumers to improve awareness of and access to credit information.
- Competition and innovation – potential changes to foster greater competition and innovation.
- Industry governance – reform of industry governance arrangements to help deliver key measures and provide enhanced transparency and accountability.
The package of remedies consists of proposed new requirements to improve the quality of credit information in the market, and industry-led remedies will be taken forward by the new governance body in the market with FCA input.
Interim working group
We have formed an interim working group (IWG) with diverse industry representatives and consumer bodies to produce recommendations to the FCA on the design, implementation, and operation of the new Credit Reporting Governance Body (CRGB). Read more information about the IWG.
We thank the organisations and individuals who responded to our Interim Report, engaged with us to discuss their feedback, and contributed to the proposed new governance arrangements, including being part of the IWG.
The IWG formally launches in January 2024 and will provisionally run for up to 9 months. We will engage with and support the IWG through its term, after which we expect the CRGB to be formed by the industry. Thereafter, the new governance body, CRGB will consider the list of recommendations in the CIMS final report.
We expect to publish a series of consultation papers, starting with the publication of an initial consultation paper on FCA rules relating to mandatory data sharing by the end of 2024. The consultation papers will include cost benefit analysis and competition assessments, which will set out the full details of our proposed rules.