On 29 April 2024, the FCA published a policy statement (PS24/3) on PSD reporting in consumer credit firms.
The FCA consulted on these changes in September 2023 when it proposed introducing three new PSD returns (i.e., Sales, Performance and Back Book PSD) into Chapter 16 of the FCA's Supervision manual (SUP 16). These returns will allow the FCA to collect more detailed data about the consumer credit market as opposed to the limited PSD it currently collects from firms undertaking high-cost, short-term credit and home-collected credit. Through these returns the FCA is requiring firms to provide detailed information on the initial sale, and ongoing performance of individual agreements. In the FCA's views, this enhanced data will enable it to better understand how firms operate and gain further insight into the consumer credit market. This will also allow the FCA to authorise and supervise firms more effectively and intervene quickly in case of risk of consumer harm in this market.
So what?
Under the new rules the FCA is introducing three new PSD returns to collect more granular information about the sale and ongoing performance of consumer credit products, including: Sales PSD; Performance PSD; and Back book PSD. Firms will be required to report the following data to the FCA as part of the Sales and Performance PSD returns:
- Core agreement data;
- Borrower and affordability data;
- Charges and fees; and
- Arrears and forbearance.
Firms will also need to comply with the complete and accurate reporting provisions as set out in SUP 16.3.11R and SUP 16.3.12G.
Lenders will submit sales and performance data on a quarterly basis to enable the FCA to monitor the ongoing performance of agreements through the full life of the agreements. For agreements entered into prior to the firms’ first reporting period, lenders will submit back book data as a one-off submission.
The new rules are creating some very complex thresholds and milestones that relevant firms should consider carefully in determining how these requirements will apply to them. The rules are already in force from 1 May 2024, so relevant firms need to implement the changes and comply with the new reporting requirements within the required timeline and as per the threshold criteria set out in the final policy. The FCA has confirmed that a longer implementation period will be applied, so that large firms (£20m plus) have 14 months and small firms (£2- £20m) have 20 months to prepare.
Firms must get ahead of this and look at their current data files to assess what extra data they must gather to comply with the requirements. They must also take steps to assess their current ability to collect the data required, the possible system upgrades that are likely to be required and the implementation costs of doing so.
