This evolution has been further accelerated by the COVID-19 pandemic and the cost of living crisis, which have amplified the need for lenders to truly understand a consumer’s financial reality.

In this complex environment, the ability to accurately measure a consumer’s affordability, the capacity to comfortably repay credit or a loan, is not just a regulatory necessity (reinforced by the 2023 Consumer Duty), but the cornerstone of sustainable business growth.

As mortgage payments increase and more people rely on credit cards, having a comprehensive view of income and expenditure is non-negotiable.

The ability to evidence a consumer’s income is a key part in any affordability assessment. Many lenders rely on Current Account Turnover (CATO) data to verify a consumer’s declared income.

A significant, industry-led change to consumer CATO membership, effective from March 2025, has fundamentally changed access to this vital data. This change ensures more FCA-authorised organisations can access a full suite of enhanced CATO data insights, which was previously only available to CATO providers.

This provides a significant uplift in the quality of data available to a wide range of organisations, including:

• credit card companies
• banks that do not have current accounts products
• retail credit providers
• telco and auto finance providers

For these organisations, the benefit is immediate: access to more data to improve affordability risk decisions.

The key innovation of the enhanced CATO data is the shift from a simple Red/Amber/Green (RAG) verification flag to providing more granular metrics that solve critical lending challenges:

1. CATO income estimate
   Where a customer’s declared income cannot be verified, an actual income estimate can be provided under certain conditions. For new credit applications, this estimate can be provided if it is less than or equal to 110% of the customer declared income.
2. Income Verification Index & income confidence
   These are powerful tools and provide more granularity than the old RAG flags. They help determine if a consumer’s current account has sufficient, consistent, and stable CATO to support the income declared.
3. Enhanced CATO insights
   This provides clear Evidence of Income for an independent view of income separate from declared income, alongside Income Confidence (which measures the number of months CATO meets a defined percentage of declared income).

This allows lenders to move away from binary decisions. Instead of declining an applicant due to a low-level RAG status, lenders have the confidence to approve those managing their finances responsibly, thereby driving genuine financial inclusion.

Affordability orchestration is a key area of focus for Equifax. We recognise that a combination of different data sources is necessary to serve all major consumer groups and drive better customer experiences.

Equifax supports clients through three pillars:

• Data
  Our rich depth and breadth of consumer data helps lenders optimise new lending, identify growth opportunities, and proactively manage at-risk consumers. The Equifax Affordability Suite combine the best of bureau, open banking, and modelled expenditure data to help organizations derive an accurate net disposable income.
• Consultancy
  Consultants, like me, help organisations understand their consumers, ensuring they gain access to the right products and services and create a positive customer outcome.
• Technology
  New technology, including our cloud migration, enhances stability and availability, ensuring “always-on” access to data. This commitment to technology ensures quick deployment of new data, allowing us to deliver innovative solutions that meet evolving market needs.