The UK’s financial watchdog has called on credit rating firms to boost their credit checks on customers today amid fears that lenders are dishing out loans to borrowers based on patchy information.
In a statement today, the Financial Conduct Authority said credit reference agencies (CRAs) needed to provide a “higher quality of credit information” in order for firms to make lending decisions to “better reflect people’s underlying financial circumstances”.
The watchdog has been tightening the screws on lenders and the credit markets in recent weeks, firing a series of warning shots over the behaviour of lenders as the cost of living rises.
Interim chair of the watchdog Richard Lloyd told MPs earlier this month that lenders needed to “step up” and support customers, as he warned that the regulator was ready to step in with enforcement action.
IN a market study published today, the FCA laid out a range of measures to improve the market, including setting up a new “representative and accountable industry body” and improving the quality and coverage of credit information.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said it was now “vital” the credit information market “works effectively for firms and consumers”.
“We want to see industry reform to help deliver the changes, but in the meantime, it is important consumers know how to access their credit information and talk to their lenders if they are facing difficulties,” Mills said.
“Our proposals will help consumers get better decisions from lenders and lenders to have confidence that the information they have access to is sufficiently comprehensive.”
The watchdog said that there are currently discrepancies in the information held by different credit reference agencies which was also blurring the picture on borrowers’ ability to pay for loans.
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