FCA Consultation: Improving the UK Credit Information Market | 2024 Updates

The Financial Conduct Authority (FCA) is seeking feedback on proposed rules designed to improve the credit information market in the UK, following a market study finalized in December 2023. The proposed remedies aim to address shortcomings in the coverage and quality of credit data, which the FCA believes impacts access to financial products and their pricing. The December 2023 report, known as MS19/1, identified a need for improvements across the credit information sector. The FCA’s current consultation focuses specifically on the rules and guidance it intends to implement, alongside industry-led reforms and changes to governance arrangements. The FCA stated that consumer credit information is a vital component of the UK economy, contributing to sustainable growth. The FCA’s action plan, initially outlined in July 2023, centers on ensuring banks and building societies appropriately pass on interest rate rises to savers, improve communication with customers, and offer more competitive savings rates. Since July 2023, the average rate paid on simple access deposits rose from 1.66% to 1.99% in October 2023, while fixed-term and notice accounts saw an increase from 2.94% to 3.52% over the same period. As of December 4, 2023, 311 instant access accounts offered rates exceeding 3%, with 173 above 4% and 37 surpassing 5%. The base rate increase of 0.25 percentage points since July was, on average, matched by firms increasing rates across all account types. The FCA’s Business Plan for 2023/24 emphasizes its commitment to protecting consumers, enhancing market integrity, and promoting competition. The plan details how the FCA will deliver the second year of its Strategy, which focuses on reducing and preventing serious harm, setting and testing higher standards, and promoting competition. The FCA’s strategic objective is to ensure financial services markets function well, with operational objectives centered on consumer protection, financial system integrity, and effective competition. A modern secondary objective, to facilitate the international competitiveness of the UK economy, is being introduced through the Financial Services and Markets Bill. The FCA’s annual report for 2023-24, published in September 2024, provides further context on the regulator’s activities and their impact on the UK economy. The report details the subleasing of three floors in Stratford in December 2023. The FCA committed to monitoring firm and market statistics to assess progress in the cash savings market, as highlighted in an update published in December 2023. This update assesses developments since the July 2023 review and identifies areas where firms need to continue improving consumer outcomes. The FCA expects continued progress from firms in the sector. The consultation on the FCA-led remedies is currently open for responses.