Executive Summary

We welcome the opportunity to respond to CP26/7: Credit Information Market Study: Proposed approach to implementing FCA remedies. As the representative body for the UK’s FinTech ecosystem - representing high-growth challengers and established global leaders - we share the FCA’s objective of creating a more transparent, accurate, and consistent credit information market. However, we have significant concerns regarding the structural and economic logic and impact of the current proposals.

We believe that the current proposal is anti-competitive and anti-innovative, and it will serve to further entrench a highly concentrated market. In our response, we put forward an alternative system which seeks to increase data coverage and improve data accuracy while promoting competition and industry-led initiatives. Our alternative approach involves the establishment of a privately-run hub or portal similar to those used in other jurisdictions, set up and run by industry experts, which will intake all consumer credit information and be responsible for distributing to Designated Consumer Credit Reference Agencies (DCCRAs) as well as coordinating data correction efforts. Our approach also seeks to gain clarity in the pathway forward for challenger CRAs to become DCCRAs, pushing for designation based on capacity to handle data, rather than percentage of market share.

It details our views on the nature of the cost benefit analysis, which relies on outdated data and flawed economic logic. We believe it oversimplifies the technical complexity of the multi-agency reporting proposals, ignores the effect on risk profiling for dual regulated firms and has a larger cost burden than the proposed £9.3 million figure listed. As a result, we call for a formal referral to the FCA’s Cost Benefit Analysis Panel.

The proposals will also deliver poor outcomes for consumers, who will face additional hurdles in seeking any corrections to their credit files.

We are extremely concerned that the proposals constitute anti-competitive measures, by providing additional privilege and market power to the existing dominant CRAs, to the detriment of consumers, and creating a barrier to entry for new CRAs. As such we consider that these proposals are in contravention of the FCA’s competition objective and UK national competition law. This exposes the FCA to a legal challenge.

We consider that this FCA proposal cuts across the development and establishment of the Credit Information Governance Body. The proposals are also backward looking - reflecting a credit information market as existed at the time of the FCA market study in 2022. Remedies need to reflect the state of the market today - with challenger CRAs and new Credit Information Service Providers (CISP) services; and should also be forward looking, to reflect the development of open finance and the rapid adoption and deployment of AI. 

We would encourage rapid action to enable the outstanding Credit Information Market Study to be closed. We propose an alternative approach to achieving this, based on tasking the CIGB to develop a new private credit information portal which can enable reporting to just one entity in a way that promotes and supports competition and achieves better consumer outcomes.

Our consultation response also outlines our views on the consultation’s provisions for updated requirements for firms in data correction, satisfying CCJ/decrees, sharing of CATO data, and the permitted uses of data sharing. For these provisions, we call for a prescribed pathway for inclusion of CATO data, an empowerment of industry-led efforts through CIGB and amendments to firm requirements to reduce firm burdens. 

Our response aims to build on the FCA’s intent for a more transparent, accurate, and consistent credit information market by creating innovative solutions which boost competition and innovation while improving the consumer experience and empowering industry.

Read the consultation