UK Financial Conduct Authority Launches Review Of The Credit Information Market

Thursday,June 27, 2019 / 12:41PM / By FCA / Header Image Credit: refreshfinancial.ca

TheFinancial Conduct Authority (FCA) has today launched a market study to examinehow the credit information market operates and the impact it has on consumers.

Firmsuse credit information when assessing credit risk and affordability. Therefore,it can impact how likely consumers are to be able to access a range offinancial services, including mortgages, loans and credit cards and, in somecases, how much they pay for them. This is significant as, according to the FCAFinancial Lives Survey, nearly 4 in 5 adults hold at least one credit or loanproduct. Furthermore, those vulnerable customers for whom a lenders decision ismore finely balanced are most likely to be affected if the credit informationmarket is not working well.

ChristopherWoolard, Director of Strategy and Competition at the FCA, said:

Wehave launched this market study as we have identified concerns about thecoverage and quality of credit information, the effectiveness of competitionbetween credit reference agencies, and the extent of consumer engagement.

Throughthe study we will seek to get a better understanding of how this vital marketworks and will identify remedies, where appropriate, to make it work moreeffectively for credit information users and individual consumers. This includesconsidering whether vulnerable customers are disproportionately affected by theway credit information is used, and whether any alternative approaches mightdeliver better outcomes for consumers.

Reflectingthe concerns that have been identified, the market study will focus on thefollowing themes:

the purpose, quality and accessibility of credit information
market structure, business models and competition
consumers engagement and understanding of credit information and how it impacts their behaviour

Inexploring these themes, the market study will assess how the sector is workingnow and how it may develop in the future. It will also look at how the marketsfor credit information work in some other countries and what the UK marketmight learn from them.

TheFCA will report on its preliminary conclusions on these themes in Spring 2020including, if appropriate, a discussion of potential remedies. The FCA is notformally consulting on the Terms of Reference, but welcome any views on them bythe end of July.

Background

1. MS19/1:Credit Information Market Study: Terms of Reference

2. The FCA will gatherevidence from Credit Reference Agencies, data contributors, providers of creditinformation services, users of credit information, and consumer organisations.

3. Views on the Terms ofReference should be sent to [email protected]by the end of July.

4. The FCA Financial Lives Survey