The journey for CIMS commenced in June 2019 following concerns raised in the FCA's Woolard Review about the coverage and quality of credit information, the effectiveness of competition between credit reference agencies (CRAs), and the extent of consumer engagement in this market. In its market study therefore the FCA sought to explore the purpose, quality and accessibility of credit information; market structure, business models and competition; and consumers’ engagement and understanding of credit information and how it impacts their behaviour.

On 22 November 2022 it published its long awaited interim report on CIMS following a long pause of its work in April 2020 due to the COVID-19 pandemic. Thereafter in December 2023 it published the final report setting out a package of remedies to address concerns in the credit information market.

So what?  

The FCA plans to make significant changes in this sector which will comprise of industry led change supported by new FCA rules. The proposed changes would place significant requirements on the credit information market participants, including lenders. Although these proposals are at the initial stages and we expect the industry being consulted on in various phases before the FCA introduces the final requirements, it is clear from recent publications that the FCA is still on course with its planned intervention. Therefore to mitigate any future compliance risks firms need to consider the implications at an early stage.

The changes proposed in CIMS include:

• new FCA rules around data reporting to improve the coverage of credit information;
• establishing a common data-reporting format for lenders and CRAs, to improve consistency of credit information;
• requirements setting clear expectations on lenders to ensure accuracy of the data they submit and correct errors promptly across 'designated CRAs';
• simplifying ways for consumers to access their credit file and dispute any inaccurate information held about them;  
• reviewing the principles of data access, and potential enhancements to the way data is shared and more timely reporting; and
• Formation of new Credit Reporting Governance Body (CRGB) with a broader remit to oversee the development and implementation of some of the remedies and to improve the current industry governance arrangements, known as the Steering Committee on Reciprocity (SCOR).

Current status and next steps

Since the publication of the final report the FCA's interim working group (IWG), which was formed to make recommendations to the FCA on the design, implementation and operations of the proposed CRGB, has been engaging with the development of the new governance framework.

On 16 April 2024 the IWG published its first report setting out recommendations on the purpose of CRGB, its operational, consumer and future-looking objectives, its roles- which will be centred on the governance of the scheme and policing of the data sharing rules & data quality, and the outcomes that CRGB will seek to achieve in delivering its objectives, i.e., improved data quality, supporting innovation and competition and enhanced financial inclusion. As this is the first of four reports, it will take some time before plans are in place to execute effective governance arrangements. In the meantime, in order to provide further direction, on 20 May the FCA published a set of principles that the new governance body, i.e., the CRGB, will seek to follow in developing the industry-led remedies. The principles confirm that the CRGB will consider:

• input from all relevant stakeholder cohorts (including, but not limited to, stakeholder cohorts represented on the IWG);
• how any steps or decisions might negatively affect its ability to decide longer-term policy or implementation options;
• how potential approaches or solutions align with the CIMS proposals, its objectives being developed by the IWG and the Consumer Duty; and
• the impact on different firms (including small businesses) and consumers, including by taking into account effects on customers with characteristics of vulnerability and financial inclusion.

It therefore appears that the FCA is continuing its engagement with relevant stakeholders on the development of the governance framework to deliver the planned CIMS remedies that we discuss above. It plans to provide interim feedback on the IWG recommendations, but will provide a full assessment once the final report is issued in the autumn of 2024. The FCA also plans to publish a number of consultation papers on its proposed rules, starting with the publication of an initial consultation paper by the end of 2024. However the timing and sequencing of these consultation papers are partly dependent on establishing the CRGB, which is expected to be formed by end of 2024.