The Financial Conduct Authority (FCA) has set out proposals to make improvements to the credit information market, with the aim of better reflecting people’s credit files in line with their financial circumstances.

The change is one of a range of measures to improve the quality of the information collated by credit reference agencies (CRAs), which is used to inform lending decisions and boost competition in the market.

The decision to make these improvements followed on from an FCA interim report, published in November 2022, which found that while the credit information market was working well in a number of ways, there were also several areas where the market could be working better.

As part of the new proposals, FCA-regulated data contributors, such as lenders, will be required to share credit information with CRAs.

A common data reporting format is also set to be introduced to “enhance consistency” across CRAs and promote competition.

Furthermore, the changes have been designed to provide greater control for consumers over how they are viewed through making it easier for consumers to record non-financial vulnerability information.

The announcement by the FCA also includes the terms of reference for an interim working group, set up to establish a new credit reporting governance body, designed to be more transparent, inclusive and accountable.

The working group, which will oversee many of the changes proposed, is expected to start its work in January 2024 and deliver in nine months.

It will be chaired by Jackie Keogh, who has over 30 years of experience in the financial industry, mainly in corporate banking and has been a senior adviser at the FCA since 2020. She will step down from that position before taking up her new role.

Executive director for consumers and competition at the FCA, Sheldon Mills, said: "Poor quality credit information can result in people being cut out of the credit market or taking on more debt than they can afford.

"Our proposals aim to improve competition and enhance the quality of credit information as tech developments occur. These improvements will help deliver more effective lending decisions, particularly for consumers with limited or poor credit records, and support sustainable economic growth.

"The changes will also enable people to more easily challenge decisions when mistakes are made."

By the end of 2024, the FCA expects to begin consulting with on new measures, including the introduction of a mandatory reporting requirement.

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