FCA proposes to extend data collection in UK consumer credit market

The primary objective of the paper – CP 24/19 (135 pages / 1.8MB) – is to improve the quality of information collected from firms engaged in credit broking, debt adjusting, debt counselling, and providing credit information services. The FCA’s proposals build on the Product Sales Data Reporting rules confirmed earlier this year.

In line with its ambition to become a data led regulator, the FCA anticipates that the collection of this data will give it a better understanding of the market and help it monitor whether firms are acting to deliver good customer outcomes.

The FCA considers the update long overdue, with the existing reporting requirements put in place when the FCA first took over regulation of consumer credit in 2014. The regulator anticipates that improved quality of data will allow earlier and more effective intervention when it is required, as well as a reduced number of ad hoc information requests. It anticipates some one-off costs for both firms and the FCA to implement the new changes, followed by overall neutral or limited additional costs for firms going forward.

Proposed changes

The proposed return seeks to apply a ‘branching logic’. Essentially, the return will include mandatory questions about how firms operate, interact with customers, and use their regulated activities. Based on a firm’s answers, the return will show a further set of questions that are relevant to its business model. The approach is designed to tailor the questions to be more relevant to the specific operations of each firm. The FCA considers that this will be simpler for firms to complete and more proportionate.

All firms in scope will be required to answer questions within the following five mandatory sections: permissions, business model, marketing, revenue and employees. These sections will cover the regulated activities firms have done in the past year, the financial products and services they offer, the marketing channels they use, their total revenue from credit and non-credit activities, and details about their employees, including pay and incentives.

Additional sections will need to be completed depending on the type of permissions that a firm holds. Firms engaging in credit broking will have five additional sections, debt adjusting and counselling will have ten additional sections and firms providing credit information services will have three additional sections.

Reporting frequency will stay the same as before. Companies with full permission and annual revenue over £5 million from credit-related activities must submit their regulatory returns every six months. Companies with full permission and annual revenue up to £5 million from these activities must submit their regulatory returns once a year.

As the new return will include more detailed questions tailored to firms’ business models, a very limited number of existing consumer credit returns will be fully or partially replaced by the new return. The affected regulatory returns are CCR004 and CCR005. Firms will still be required to submit returns under CCR001, CCR002, CCR003, CCR006 and CCR007 if they are currently required to do so.

If made, the new rules will come into effect immediately, with all firms having an initial annual submission for the period from 1 January to 31 December 2025. Following this, larger firms will complete half-yearly submissions.

Impact of the proposed changes

The move to more granular reporting and greater collection of data is consistent with the FCA’s supervisory direction over the past few years. If the increased granularity of reporting in the consumer credit sector delivers the benefits the FCA anticipates, it is a model that the FCA may well look to implement in other sectors.

It is not clear yet how optimistic the FCA’s views are on costs to firms of this approach to reporting. Adaptations to systems are likely to be required to ensure that the required data can be extracted to answer the FCA’s questions. 

Notably, in a sector that has a significant number of appointed representatives, the FCA has proposed that principals must report consolidated data from their appointed representatives, which will require principals to liaise closely with their appointed representatives to gather the required data. 

Finally, it is only a limited amount of existing regulatory returns that are being replaced in their entirety with this reporting, leaving firms subject to other returns continuing to have to complete and submit these returns as well.

The new return may, however, assist firms in gathering useful data for their ongoing consumer outcomes monitoring. In a regulatory environment that requires monitoring of customer outcomes under the consumer duty and principal firms to monitor their appointed representatives, it remains worth considering whether the data indicates trends or approaches relevant to matters such as value assessments, foreseeable harm or the conduct of appointed representatives.