FCA plans shake-up of credit data sharing to support lending decisions

Lenders could have access to more comprehensive information to support lending decisions, under new proposals by the FCA. 

The FCA is consulting on designating certain credit reference agencies. CRAs collect personal financial data – including credit repayment histories – to provide lenders with information that helps inform lending decisions.

Where the information CRAs hold is limited, people may face barriers to accessing credit, or be exposed to increased risks of unaffordable lending, errors or fraud.

The regulator is proposing that credit and mortgage firms who currently share consumer credit information with at least one of the credit reference agencies to be designated by the FCA, will be required to share the same information with the other designated agencies.

There are additional proposals on the quality and accuracy of information shared about consumers and on firms marking county court judgments (CCJs) or Decrees as satisfied (with the relevant court or Registry Trust), where a consumer has repaid the debt.

The changes aim to close gaps in consumers’ credit files and ensure these more accurately reflect people’s financial circumstances. 

Alison Walters, director of consumer finance at the FCA, said: “Access to affordable credit relies on good quality data – it’s vital in helping consumers navigate their financial lives. That’s why we want to make sure everyone’s credit information is as full and accurate as possible.” 

Richard Pinch, senior risk director at Broadstone, commented: “Ensuring lenders have access to more complete and consistent credit data is a logical and welcome step, as high-quality information sits at the heart of both prudent lending and good consumer outcomes. Requiring firms to share data with all designated credit reference agencies should help reduce blind spots in credit files, improve risk assessment and support more accurate pricing and affordability checks.

“For lenders, however, the proposals will mean reviewing operational processes to ensure they can comply on a consistent basis. There will also be a focus on data quality as more comprehensive reporting will increase the visibility of any gaps or inaccuracies.

“If implemented effectively, the reforms have the potential to widen access to credit for consumers, particularly for those whose financial positions are not currently fully reflected in their records. Borrowers could benefit from increased competition in retail lending markets which could feed through into increased choice and potentially more attractive pricing while strengthening safeguards against over-indebtedness. 

“The consultation will be an important opportunity for firms to engage on the practicalities, proportionality and implementation timelines to ensure the new framework delivers the intended benefits across the market.”