INSIGHTS ¦ Credit Information Market Study – Final Report

Summary

The Credit Information Market Study Final Report addresses significant aspects of the credit information market, emphasizing the importance of quality data, competition, consumer engagement, and governance to facilitate effective lending decisions and enhance financial inclusion. The report identifies areas needing improvement and proposes remedies to ensure the market operates efficiently for consumers, lenders, and the wider economy.

Key Points

  1. Credit information significantly influences lending decisions and financial services.
  2. The market comprises credit reference agencies (CRAs), data contributors, users, service providers, and consumers.
  3. Identified issues include data coverage differences among CRAs, consumer awareness, and governance effectiveness.
  4. Proposed remedies focus on governance, data quality, competition, innovation, and consumer engagement.
  5. Feedback on interim report findings generally supports the need for proposed remedies.
  6. New governance arrangements proposed include the establishment of the Credit Reporting Governance Body (CRGB).
  7. Remedies affect a variety of stakeholders, including regulated firms, CRAs, and consumers.
  8. The market’s evolution, including digital products and potential Big Tech entry, necessitates agile governance.
  9. The report aims to improve market outcomes for consumers and firms by enhancing credit information quality and accessibility.
  10. Stakeholders broadly agreed with the report’s findings and the necessity for the proposed remedies.
  11. The report highlights the importance of aligning FCA-led and industry-led remedies to ensure cohesive market improvements.
  12. Open Banking and technological advancements are recognized as factors that could shape future market dynamics.

Key Statistics

  • Three large CRAs dominate the UK market: Equifax, Experian, and TransUnion.
  • 57 responses were received from the credit industry and consumer groups on the proposed remedies.
  • The remedies package is categorized into FCA-led, industry-led, and joint FCA and industry remedies.
  • Over 1 in 9 British consumers are active users of Open Banking as of October 2023.
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Key Take Aways

  • The quality of credit information is crucial for informed lending decisions and financial inclusion.
  • Effective competition and innovation in the credit information market are essential for consumer and economic well-being.
  • Consumer engagement with credit information needs improvement for better financial decision-making.
  • Governance arrangements should be inclusive and responsive to market developments.
  • The proposed remedies aim to address identified market issues comprehensively.
  • Collaboration between the FCA, industry stakeholders, and consumers is vital for implementing effective remedies.
  • Monitoring and adapting to technological advancements and market changes are necessary for future-proofing the credit information market.
  • The establishment of the CRGB is a significant step towards improving market governance.
  • Open Banking presents opportunities and challenges for the credit information market.
  • Feedback from stakeholders is crucial for refining and implementing proposed remedies.
  • The report underscores the FCA’s commitment to enhancing the functioning of the credit information market for all participants.
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