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FCA credit information market study: our response

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Response to FCA credit information market study 

The Financial Conduct Authority recently commenced a market study looking at credit information and asked for initial views on its published terms of reference. 

StepChange has welcomed the FCA’s decision to conduct the market study: limitations in credit information can contribute to problem debt through bad lending and difficulty identifying people in the early stages of financial difficulty. Limitations in credit information also undermine efforts to develop and expand affordable alternatives to high cost credit.

We broadly welcome the themes the FCA proposes to use to explore questions linked to credit information, which include the quality of credit information and its effect on consumer behaviour. We particularly welcome the FCA’s commitment to look specifically at the impact of credit information on people with vulnerable characteristics.

We highlighted five areas we believe the FCA should address: 

  • The relationship between credit information and problem debt: we would like the FCA to identify gaps in credit information and weaknesses in firms’ use of data to better understand how the credit information system can be developed, and what actions can be taken by firms, to better support good lending decisions and reduce problem debt. 
  • The role of credit information in shaping access to affordable credit: the FCA should examine the relationship between credit information, access to different forms of credit and pricing to identify where limitations in credit information are a significant factor in lack of access to appropriate credit products or inappropriately priced products. 
  • Credit information and recovery from problem debt: at present, credit reporting for those who experience problem debt and/or enter a debt solution appears can be inconsistent and fails to recognise positive changes in repayment through debt solutions – we would like the FCA to work with firms to look at the potential to ensure credit information reflects positive changes in repayment behaviour. 
  • The effect of credit information on consumer behaviour: consumers’ awareness and understanding of credit information may lead to negative outcomes, for example if people use credit builder products inappropriately, and the FCA should examine the extent to which this issue is leading to financial problems. 
  • The governance of credit information: the role of credit information in access to both financial and non-financial service is increasing and it is critical that governance arrangements for the collection and sharing of credit information support robust scrutiny and oversight in the public interest.

Download our consultation response to read our full response and recommendations.

Download our response