THE FINANCIAL Conduct Authority (FCA) has launched a market study on the credit information sector amid concerns over how it helps and hinders borrowers from getting loans.
The City watchdog said it will focus on the purpose, quality and accessibility of credit information, business models and competition as well as consumer engagement and understanding of credit reports and information.
The regulator said financial services firms use credit information when assessing credit risk and affordability and therefore it can impact how likely consumers are to be able to access a range of financial services, including mortgages, loans and credit cards and, in some cases, how much they pay for them.
‘We have launched this market study as we have identified concerns about the coverage and quality of credit information, the effectiveness of competition between credit reference agencies, and the extent of consumer engagement,” Christopher Woolard, director of strategy and competition at the FCA, said.
‘Through the study we will seek to get a better understanding of how this vital market works and will identify remedies, where appropriate, to make it work more effectively for credit information users and individual consumers.
“This includes considering whether vulnerable customers are disproportionately affected by the way credit information is used, and whether any alternative approaches might deliver better outcomes for consumers.”
The FCA will report on its preliminary conclusions on these themes in Spring 2020.