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Improvements needed to the credit information market to deliver better lending decisions for borrowers

by | Nov 22, 2022

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The Financial Conduct Authority (FCA) has set out proposals to improve the credit information sector so it can deliver higher quality and more comprehensive information for consumers and firms.

Credit reference agencies (CRAs) build financial profiles of consumers which they sell to credit information users to inform lending and other decisions.

The FCA wants to see a higher quality of credit information, so that lending decisions better reflect people’s underlying financial circumstances. This should help make sure that consumers are not denied credit they could afford or given credit they can’t afford.

The FCA market study proposes a range of measures to improve the market, such as:

  • establishing a new, more representative and accountable industry body to oversee arrangements about sharing of credit information
  • improving the quality and coverage of credit information
  • enabling greater competition and innovation through potential changes to data access arrangements and more timely data reporting
  • simplifying ways for consumers to access their credit file and dispute any inaccurate information held about them

Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said:

‘It is vital that the credit information market works effectively for firms and consumers. We want to see industry reform to help deliver the changes, but in the meantime, it is important consumers know how to access their credit information and talk to their lenders if they are facing difficulties.

‘Our proposals will help consumers get better decisions from lenders and lenders to have confidence that the information they have access to is sufficiently comprehensive.’


Lenders have said that they are largely happy with the breadth of information they have access to, but there are differences in the information held by different credit reference agencies.

While 90% of consumers are aware of the existence of credit scores and files, the FCA’s borrowers in financial difficulty research revealed that 47% of borrowers in financial difficulty mistakenly believed that the simple act of contacting lenders would have an adverse impact on their credit file – with 16% ignoring contact from lenders as a result.

Further research by the FCA about how consumers use credit information found that 43% of consumers did not realise they have a right to access their statutory credit report for free.


The FCA has asked the industry to set up a new representative body in 2023 and will then work with the industry to agree further improvements.

The current cost of living pressures means consumers may be more worried about their credit file than usual. Credit reference agencies and those offering credit information services should consider the proposals alongside the forthcoming Consumer Duty, to see if their processes and communications with customers could be improved.

The report is part of the FCA’s strategy to promote competition and positive change in the UK’s world leading financial services industry, which has widely recognised and respected high standards.


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