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FCA launches credit information market study

The Financial Conduct Authority (FCA) has launched its keenly anticipated review of the credit information market, as Walker Morris consumer finance expert Jeanette Burgess explains.

On 27 June 2019, the FCA published the terms of reference of its Credit Information Market Study, following identified concerns about the coverage and quality of credit information (which is critical in the retail lending sector), the effectiveness of competition between credit reference agencies, and the extent of consumer engagement.

Given these concerns, and the key role that credit information plays in enabling consumers’ access to a wide range of financial services (including loans, mortgages and credit cards), it is vital for the FCA to understand how the market functions, whether it does so in the interests of credit information users and consumers, and whether there is scope for improvement. The focus will be on the following themes:

  • purpose, quality and accessibility of credit information
  • market structure, business models and competition
  • consumers’ engagement and behaviour

The FCA will also explore the future evolution of the market, including the potential benefits and harm to consumers of market developments.

While the FCA is not formally consulting on the terms of reference, it welcomes any views on them and the specific questions set out in Annex 1, to be received by the end of July 2019.

Following an initial information gathering stage, the FCA aims to publish an interim report in spring 2020, which may include a discussion of potential remedies. Following a consultation period, final findings are expected to be published later in 2020.

Retail lending is one of the FCA’s sector priorities, as set out in its latest Business Plan. This Credit Information Market Study is the latest in a series of initiatives in this area, including recent interventions on overdrafts, in the rent-to-own and other high-cost credit markets, and a package of proposed remedies in the mortgages market. Vulnerability is a key theme underpinning the FCA’s work.

Walker Morris will continue to monitor and report on developments.