Moving with the times
The future of responsible lending in a digital first world

Published 17 April 2025

As the financial services industry transitions to a digital-first world, responsible lending must evolve to meet new expectations for fairness, transparency, and customer-centricity. Digital transformation is reshaping how lenders engage with customers and manage their portfolios, enabling more effective, data-driven lending practices that enhance both the lending and collections processes, promoting better customer outcomes while upholding financial responsibility. Automating lending decisions and managing credit risk Central to this transformation is the ability to automate lending decisions and manage credit risk effectively. With the advent of cloud-based decision engines, lenders can now make quicker and more accurate lending decisions, ensuring that processes remain efficient while maintaining fairness. These decision systems can integrate various data sources, including data from open banking providers, AI, and the credit reference agencies, providing a more comprehensive view of a borrower’s financial health. This broader access to data enables lenders to make informed decisions that take a customer’s financial situation and affordability into account, which is crucial for ensuring that credit is provided only when the borrower is financially capable of repayment. By considering affordability, lenders can mitigate the risk of over-indebtedness, safeguard their portfolios and customers’ financial well-being, and reduce the likelihood of defaults and financial distress. By embracing a more holistic, customer-centric approach, lenders can better manage risk, identify vulnerable customers early, and ensure positive, sustainable long term customer outcomes. Identifying and supporting vulnerable customers Responsible lending also requires a strong focus on identifying and supporting vulnerable customers. By utilising advanced technologies, lenders can pinpoint individuals who may be experiencing financial difficulties and provide more tailored, supportive repayment plans. When lenders have access to open banking data, they can monitor transaction histories and evaluate spending patterns to detect signs of vulnerability early and more effectively. This allows them to intervene proactively and provide flexible solutions, ensuring that customers in difficulty are supported and experience the best possible outcomes. Digital-first and seamless loan origination The transition to digital-first processes also encompasses the application journey. Today’s borrowers anticipate straightforward, fully digital loan origination experiences. By automating the entire process through cloud-hosted decision engines, from application to approval, lenders can lower operational costs, accelerate approval times, and enhance the customer experience. This comprehensive, end-to-end automation also ensures that credit risk management remains robust while providing a seamless customer journey. A holistic, customer-centric approach Ultimately, responsible lending in a digital-first world involves more than simply adopting technology for efficiency. It is about employing digital tools and decision systems to make fair, transparent, and informed choices that prioritise the customer’s financial well-being and foster ethical lending practices. By embracing a more holistic, customer-centric approach, lenders can better manage risk, identify vulnerable customers early, and ensure positive, sustainable long term customer outcomes.

Firing on all cylinders
Embrace open banking for operational efficiency

Published 17 April 2025

For many lenders, the affordability assessment process is still weighed down by long application forms and manual reviews from underwriters, leading to long processing times. Brandon Wallace, Product Manager at Bud, explains how enriched transaction data can help lenders to cut costs and scale efficiently, in addition to increasing approval rates and reducing risk.   What is enriched transaction data? Using open banking and enrichment models, fintechs like Bud take raw, unstructured, messy transaction data and identify categories, merchants, locations and regularity of transactions. This data can then be analysed to provide insights so that lenders can quickly assess affordability without relying on cumbersome manual reviews. Faster decisions, lower costs One of the biggest operational challenges lenders face is the resource it takes to manually assess applications. Trawling through bank statements to verify income, understand spending patterns, and understand whether a customer can service a loan are all critical tasks, but are time consuming and tedious steps that slow down decision making. “AI can help automate workflows and processes, work autonomously and responsibly, and empower decision making and service delivery.” according to a report from Google Cloud. Use of enriched transaction data means lenders can automate much of this process. They can verify income, organise spending into categories such as ‘essential’ and ‘non-essential’ spend, surface risky activity (such as problematic gambling, debt collection agency transactions or loan stacking) and identify trends. This reduces processing time and allows underwriters to spend their time on high value tasks rather than data entry and analysis. With these efficiencies, lenders significantly reduce processing times. At Bud, one of our clients cut application times from 40 minutes to under five minutes, while another reduced processing time by 25% for returning customers and 16% for new ones. Reduce friction for applicants A smoother application process isn’t just beneficial for lenders – it’s also a major win for customers. By integrating open banking, lenders can remove friction points such as document uploads, manual income verification and long decision wait times. One of our clients at Bud is now processing 75% of applications in under 15 minutes. These customer experience improvements lead to higher application completion rates and increased conversion. Scaling without compromising accuracy As lenders grow, maintaining high-quality affordability assessments at scale becomes increasingly difficult. Traditional affordability checks, relying on manually reviewing bank statements and credit reference agency data, lack real-time insights and create bottlenecks. Enriched transaction data provides a categorised, real-time view of customer finances, enabling faster, more accurate assessments. Bud’s affordability tools also help lenders standardise affordability checks across large volumes of applications. By automating aspects of the affordability assessment process and reducing manual intervention, lenders can scale up their operations without increasing costs proportionally. The future of lending operations Lenders must find ways to operate more efficiently without sacrificing the quality of their lending decisions. The benefits of open banking and enriched transaction data are much greater than simply assessing risk. They can transform operations, improve scalability and reduce costs. With the right partner, …

Technology and ethics
Delivering financial stability in a rising tide of unsecured debt

Published 17 April 2025

Unsecured debt in the UK reached an average of £4,287 per adult in 2024, marking a troubling trend as household debt has steadily risen over the past two decades. With household debt now exceeding £2 trillion, its impact extends beyond finances, deeply entwining with mental health challenges. Over 1.5 million people in England face both debt and mental health issues, with 40% of those affected citing financial stress as a key factor in their struggles. The cycle of growing financial anxiety and declining mental health highlights the urgent need for a compassionate, effective approach to debt recovery. Unfortunately, traditional methods, such as repetitive calls or generic communication, often exacerbate the problem, leaving consumers feeling overwhelmed and unsupported. Advancing technology to transform debt recovery The debt recovery sector is turning to technology to create more efficient and humane processes. The global debt collection software market, valued at $4.8 billion in 2024, is projected to reach $11.3 billion by 2033, driven by innovations like AI and machine learning. These tools enable automation, enhance efficiency, and remove much of the stress associated with financial recovery. AI-driven personalisation, automated reminders, and self-service portals offer tailored experiences that respect individual circumstances. Data analytics and automated workflows also help agencies identify patterns and insights, enabling them to develop personalised repayment strategies and offer proactive solutions before debts spiral. For example, AI can pinpoint optimal contact times, reducing hassle for debtors while increasing recovery success. These advancements not only improve recovery rates but also reduce operational costs, creating a more seamless and supportive process for all parties involved. Ethics and empathy at the core While technology is essential, ethical standards and empathy must remain central to debt recovery. Collections teams should prioritise understanding and open communication, fostering achievable payment plans that reduce financial strain without undue pressure. Building trust and maintaining positive client relationships are vital to success. Behind every debt is an individual navigating complex circumstances. Agencies that leverage technology to provide flexible, respectful solutions will stand out as leaders in the evolving debt recovery landscape. The future lies in balancing cutting-edge tools with human understanding, ensuring a process that supports consumers without feeling punitive or overwhelming. The sector’s shift toward a tech driven, ethical approach benefits all stakeholders. By focusing on efficiency and empathy, agencies can deliver tangible results while improving the financial and emotional well-being of those they serve. How dealerships should react Dealerships must stay ahead of evolving customer expectations. The increasing role of technology in the customer experience highlights the potential of cryptocurrency as a future trend. For dealerships uncertain about the path forward, understanding the pros and cons of cryptocurrency and the steps required for implementation is crucial to preparing for potential shifts in the industry.

An ongoing commitment to ESG
Equifax publishes 2024 ESG Report

Published 17 April 2025

Equifax launched its second annual Environmental, Social & Governance (ESG) report in February, highlighting the continued importance as part of its business strategy. Underpinned by their key priorities – Consumer Impact, Community, Suppliers, Environment, Security, Privacy, Culture and Careers, Corporate Governance – sits its core values and purpose of ‘helping people live their financial best’ and using the power of data to make a positive impact. Equifax takes inspiration from the one in two adults that do not feel confident managing their money (Money and Pensions Service) and the £24bn in unclaimed benefits each year (Policy in Practice), with a goal to educate both current and future consumers to prevent financial distress, particularly for those most vulnerable using data to address barriers to financial inclusion. Using intuitive data, the Equifax ESG report showcases their progress in diversity and inclusion through employee-initiatives and measurement of diversity statistics through a Self-ID campaign attracting a 65% completion rate, exceeding the 60% target. They also demonstrate consideration to their environmental impact through a maturing data minimisation strategy and Google Cloud impact measurement, part of the global business’ net-zero plan for 2040. (Equifax has) a goal to educate both current and future consumers to prevent financial distress, particularly for those most vulnerable using data to address barriers to financial inclusion. Another key focus is Equifax’s continued work on supply chain transparency and reporting, moving closer to their target of 73% Science-Based Target Initiative (SBTI) suppliers. In addition, it has driven a 196% increase in engagement in their community outreach programme centred on financial education and career education to drive social mobility for young people. The organisation also holds the Bronze EcoVadis rating with sustainable procurement being a key focus for 2025, giving key insights into our effectiveness as a business and how we can work together as a team to address our gaps and improve our transparency. Equifax ‘Speakers for Schools’ partnership is a highlight of the report, showcasing their work delivering a pilot education outreach programme to underserved children from schools in areas of deprivation, enhancing financial literacy and their ability to manage their own finances. In 2022, Equifax partnered with Thrive CSR to measure and report the social value of their work. Aligned to the Social Value Model and UN Sustainable Development Goals. Since September 2022, they’ve reported over £45m in value delivered to society. You can read our full report here.

AI versus human expertise
Why authentic content wins in consumer credit

Published 17 April 2025

The digital space is where consumer credit providers win or lose. In the race to optimise websites, many turn to AI-powered content tools. These promise quick SEO gains and effortless content creation, but relying solely on AI can be a costly mistake. Here’s why human expertise remains crucial for building trust and engagement.   The AI paradox: Inauthenticity and disconnection AI lacks the human touch needed to convey trust and authenticity. It often produces generic, robotic content that fails to resonate with consumers seeking financial guidance. For instance, an AI-generated line like “We offer flexible loan options for everyone!” lacks the empathy that reassures customers facing financial decisions. User experience: AI’s content pitfalls Search engines like Google prioritise user experience, and poorly structured, grammatically challenged AI content creates a frustrating experience. Imagine a financing page riddled with nonsensical sentences. Confused customers will likely leave the page, miss valuable information and hinder your conversion rates. High bounce rates and low engagements also send negative signals to search engines, potentially burying your website in the digital abyss. SEO risks: AI and duplicate content AI rewriting tools can inadvertently create duplicate content – a cardinal sin in the eyes of search engines like Google. Copied content is seen as a manipulative attempt to climb the search rankings, leading to penalties that push your website down the page or worse – delisting it entirely. The sophisticated algorithms of Google are adept at detecting unoriginal content, and the consequences of using AI to rewrite can hurt your dealership’s online visibility and credibility. Why human expertise matters in SEO Effective SEO is an intricate dance involving keyword research, schema markup, and understanding user intent. AI simply doesn’t have the finesse needed to strategically place keywords or leverage voice search optimisation. Without human expertise, your dealership’s website might miss out on crucial search terms related to your specific inventory or services. Imagine wanting to rank highly for “finance lender near me”, but your AI-generated content misses this local search intent. The human advantage: Building trust and driving conversions Consumer credit decisions are deeply personal, requiring clear and empathetic communication. Human content creators craft engaging, tailored copy that addresses concerns and offers solutions. Explaining complex financial terms in a conversational, reassuring tone fosters trust and encourages customer action. Conclusion: AI can assist, but humans win AI can support content creation, but human expertise is irreplaceable. Consumer credit providers must prioritise authenticity, clarity, and trust to stand out, rank well, and connect meaningfully with their audience.

A growing threat
Fraud: A danger to the credit industry, customers and communities

Published 17 April 2025

Fraud is more widespread than ever, causing significant harm to businesses, individuals, and communities. It erodes trust in the digital economy, hampers economic growth, and destabilises vulnerable economies worldwide. As criminals adapt and evolve, the impact extends far beyond financial losses, threatening the integrity of financial systems and consumer confidence. The cost of fraud to the UK economy is staggering, estimated at £219 billion annually. These stolen funds fuel other forms of crime, creating a ripple effect of harm. In 2024 alone, a total of £11.4 billion was stolen from consumers. The number of fraud filings to the Cifas National Fraud Database (NFD) also reached an all-time high, with over 420,000 cases recorded to the NFD last year – a 13% rise compared to 2023. The rapid advance of technology is supercharging the reach and capabilities of criminals. AI is revolutionising the way they operate, enabling them to harvest data at scale, generate near-flawless fake documents within seconds, and execute attacks on networks with unprecedented efficiency. The use of deepfakes and AI-generated voices has made impersonation fraud more convincing than ever, allowing criminals to pose as consumers, business leaders, and authority figures to steal sensitive data and life savings. As a result, fraud is not only harder to detect but also more pressing and urgent than ever before. From our most recent data, Cifas members recorded a fraud-risk case to the NFD every two minutes, and together we prevented over £2.1 billion in fraud losses in 2024. Here is what our latest insight tells us. AI is amplifying identity fraud Identity fraud is the dominant fraud type recorded to the NFD. This has been the case for many years. Criminals rely on well-established impersonation tactics, luring victims into fraudulent transactions through scam calls promising fake handset upgrades and discounts. Those aged 61 are the most targeted demographic highlighting a need for increased education and protective measures to safeguard these consumers. Account takeovers are a concerning trend Facility (account) takeovers surged in 2024. Mobile phone accounts were the primary target as online retail platforms remained a hotspot, with criminals frequently altering account details or redirecting deliveries to fraudulent addresses. False applications are not slowing down False applications increased by 10% in 2024. AI-driven fraud is also playing a critical role in this trend. Criminals are using sophisticated generative technologies to create high-quality fake documents that can evade traditional verification checks. Money muling remains a threat Individuals under thirty years old accounted for 61% of money mule cases, reinforcing the need for continued education and proactive prevention strategies to deter young people from being recruited into illicit financial schemes. Insider threats are a hidden danger Employees who misuse their access to company systems remain a critical risk according to filings to the Cifas Insider Threat Database, often exploiting their knowledge of internal security measures to evade detection. The need for vigilance and collaboration Our latest fraud-risk data serves as a stark warning: fraud is evolving at an unprecedented pace, and no sector …

Cultivating relationships
Introducing your new membership manager

CCTA

Published 17 April 2025

I’m delighted to introduce myself as the new Membership Manager at the Consumer Credit Trade Association (CCTA). It’s an exciting time to join the organisation, and I’m eager to connect with all of you – our valued members – to ensure that you receive the best possible support, insights, and services that CCTA has to offer. With a strong background in membership engagement and support, I am passionate about building relationships, understanding the challenges our members face, and providing solutions that help your businesses thrive. The credit industry continues to evolve rapidly, and my role is to ensure that you, our members, are well-equipped with the guidance, resources, and representation needed to navigate these changes confidently. My focus areas Since stepping into this role, I have focused on three key areas: member engagement, enhancing CCTA’s services, and contributing to strengthening our industry voice. These priorities align with our mission to provide uncompromising practical help to businesses offering credit to consumers. 1. Stengthening member engagement At CCTA, our members are at the heart of everything we do. One of my top priorities is to ensure that every member feels heard, supported, and fully aware of the benefits available to them. Whether you’re a long-standing member or have recently joined, I want to make sure you receive personalised support and valuable insights from us. To achieve this, I’ll be focusing on: Building stronger communication channels so you can reach us easily and receive timely updates. Listening to your needs through direct conversations, surveys, and networking events to ensure we tailor our services accordingly. Encouraging active participation in our events, discussions, and policy initiatives so that your voice helps shape the future of our industry. Expect to hear from me regularly as I work on making membership engagement more interactive, accessible, and beneficial for you. 2. Enhancing member services CCTA already offers an extensive range of events, agreements, statutory documents, online advice, and industry updates, but I want to ensure that these services remain relevant, practical, and easy to access. I will be working closely with our team to: Expand our event offerings so we cover the most pressing topics in the industry, from regulatory updates to best practices in consumer credit. Improve access to documents and agreements, ensuring you always have the most up-to-date legal resources at your fingertips. Enhance our online advice and news updates so that you can stay ahead of industry changes without having to search for information yourself. Your feedback will be crucial in helping us refine these services, so please don’t hesitate to share your thoughts on what you need most from CCTA. 3. Stengthening our industry voice One of CCTA’s greatest strengths is its ability to work constructively with policymakers, regulators, and the government to advocate for the interests of our members. I will be contributing to this effort by ensuring that members stay informed about industry developments and have opportunities to engage in discussions that shape the future of consumer credit. How I can help …

The rise of alternative data in consumer lending
Enabling financial inclusion and catalysing growth

Published 17 April 2025

The landscape of consumer lending is undergoing a significant transformation. Traditionally, lenders have relied on credit scores and historical financial data to assess a borrower’s creditworthiness. However, as financial behaviours evolve and the limitations of conventional credit assessments become apparent, the role of alternative data in lending decisions is gaining prominence. Recent findings from the LexisNexis® Risk Solutions 2024 Global Consumer Lending Confidence Report reveal a notable shift in how lenders perceive and utilise alternative data. With 86% of lenders globally expressing greater confidence in using alternative credit data compared to a year ago, it’s evident that this emerging approach is not just a trend but a fundamental change in the industry. Growing confidence in alternative data In the UK, the adoption of alternative data has seen a remarkable uptick. 84% of lenders reported increased confidence in making consumer lending decisions based on non-traditional data sources. This shift underscores a growing awareness that past credit interactions do not always provide a complete picture of a borrower’s financial behaviour. One common misconception about using more data in lending decisions is that it leads to higher rejection rates. However, there is growing evidence that alternative data actually helps identify lower risk consumers who may have been overlooked by traditional credit assessments. As a result, lenders can approve more applicants and offer them better terms, fostering financial inclusion and driving business growth whilst maintaining a robust risk policy. Challenges with traditional credit data While confidence in alternative data is increasing, reliance on traditional credit data is waning. The report highlights that 59% of lenders feel less confident in making lending decisions based solely on traditional credit scores. A key reason for this is the coverage gap – 91% of lenders reported that traditional data alone does not provide a full evaluation of at least a quarter of applicants. This is a significant concern, as it means a substantial portion of potential borrowers may be either misclassified or excluded from credit opportunities altogether. Another major drawback of traditional credit data is its latency. In the UK, repayment data used in conventional credit models can be up to two months out of date. This delay can lead to inaccurate assessments of a borrower’s financial situation, potentially resulting in unfair declines, mispriced loans or missed lending opportunities. Alternative data, on the other hand, offers more real-time insights, allowing for fairer and more reliable credit decisions. Economic challenges and smarter lending The UK’s ongoing cost-of-living crisis has amplified the need for more flexible and inclusive lending solutions. Consumers are increasingly turning to credit products, including credit cards and Buy-now, Pay-later (BNPL) schemes, to manage their expenses and purchases. While these options can be beneficial when used responsibly, excessive reliance on credit, particularly in the face of rising interest rates, can lead to financial difficulties. The report indicates that 43% of respondents have observed an increase in loan delinquencies over the past year. Consequently, 95% of lenders anticipate that loan collections will be a major challenge in the …

Supporting vulnerable customers
FCA review highlights

Published 17 April 2025

I wanted to use this edition of our magazine to talk about the FCA’s recent vulnerability review and publications. On 7 March, the FCA published their findings into a review of firms’ treatment of customers in vulnerable circumstances, including their consumer research and examples of good and poor practices. It is clear that vulnerable customers remain a top priority for the regulator, and rightly so. They should be a priority for firms too. The FCA was generally happy that, overall, progress has been made by firms to deliver better treatment to customers in vulnerable circumstances. However, more is needed – and the review highlights important areas where firms can go further. One key message for firms is the link between the identification and disclosure of vulnerability and the level of trust customers place in financial services providers. The consumer research commissioned by the FCA found that around four in ten customers do not disclose their vulnerabilities due to discomfort, mistrust, or fear of worse outcomes. On the other hand, of those who did disclose, around 60% felt the firm reacted positively and made appropriate adjustments. When disclosure happens, customers feel more supported – helping to build trust in firms. Many firms have strong reactive practices in place to support customers who disclose characteristics of vulnerability. But what about proactive steps? Is your firm actively encouraging disclosure? This is an area where many firms can benefit from reflection and development. Another key message from the review is the need for good quality data and meaningful Management Information (MI). The more detailed your data throughout the customer journey and product lifecycle, the more powerful your MI becomes. Can your MI show where good outcomes are being achieved – or highlight where things are going wrong? If not, it may not be granular enough. The FCA identified firms that were not spotting or acting on poor outcomes due to inadequate data. The review also highlighted insights around customer communication. While some firms have made good progress in providing clear and timely communications to vulnerable customers, many others could do more to provide accessible channels and improve customer understanding. It’s important that members regularly review their communications – ensuring they’re as clear and accessible as possible – and that these are properly tested. Similarly, firms should review their channels to ensure they don’t create unnecessary barriers for vulnerable customers trying to seek support. One final – and important – message from the FCA is the need for targeted, tailored training that supports teams across the business in identifying and assisting customers in vulnerable circumstances. The review found that training at the product design and development stage needs improvement. Vulnerability should be considered whenever new or amended products and services are introduced. The FCA is clear: they expect more training for design and development teams – not just those on the front line. We will shortly be issuing a guidance paper with full insights into the FCA’s vulnerability work, along with practical direction on areas …

A long road ahead
Actions motor finance firms can take following the Supreme Court ruling

Published 17 April 2025

The FCA’s review into discretionary commission arrangements, together with the outcome of the Supreme Court’s review of a landmark Court of Appeal ruling regarding motor finance commissions could have widespread consequences for the motor finance sector. In January 2024, the Financial Conduct Authority (FCA) launched a review into historical motor finance discretionary commission arrangements (DCAs) which were banned in 2021 to determine whether there has been ‘widespread misconduct’. In a significant development in October 2024, the Court of Appeal ruled in favour of consumers in relation to three motor finance commission claims, stating that DCAs were unlawful unless they had been disclosed to the consumer, and that they had given informed consent to the payment. While this ruling goes beyond the scope of the FCA’s review into historical use of DCAs by motor finance firms, it has raised further concerns for the sector and the possibility of widespread liability where commissions were not properly disclosed. In response to the Court of Appeal’s ruling, the lenders involved appealed to the Supreme Court and these cases were heard over several days in early April. Given the potential impact of the outcome, the Supreme Court is expected to hand down a decision in an expedited timeframe. The FCA also recently announced that it will confirm within six weeks of the Supreme Court handing down a decision whether they will be proposing a redress scheme and how it would be taken forward. The FCA has indicated that if, considering the Supreme Court’s decision, they conclude motor finance consumers have lost out from widespread failings by firms, then it is likely they will consult on an industry-wide redress scheme. In the meantime, complaints relating to motor finance are expected to remain high, noting FCA rules mean motor finance firms have until after 4 December 2025 to respond to both DCA and non-DCA motor finance complaints. The viability of motor finance operating models While the decision of the Supreme Court and the FCA’s announcement are eagerly awaited, firms may be grappling with some of the following strategic and operational issues: The ongoing use of commission models and how this may impact broker engagement, deal flow and loan origination The impact of an increase in operational and compliance costs driven by complaint volumes, processing of data subject access requests (DSARs) and enhanced disclosure requirements The repercussions of any possible remediation exercise and likely challenges with the implementation (e.g. data, resources, scope and quantum of compensation) How can the firm remain competitive and retain market share? How can the firm manage ongoing liquidity and  working capital requirements, including identifying cost efficiencies across the business? The FCA has previously noted its concern about the financial impact of their review on firms. In a ‘Dear CEO’ letter sent in April 2024 to motor finance firms the regulator highlighted the importance of conserving cash and maintaining adequate financial resources in light of increased commission complaints, and the associated costs for handling and resolving those complaints. Guiding fims through these challenges In …

Consumer Duty board reports
Top tips

Published 17 April 2025

Last summer we helped several clients with their Consumer Duty board reports (required under PRIN 2A.8). Since the creation of the first suite of reports, the FCA has reviewed a sample and published findings, highlighting good practices and areas for improvement. We have set out six top tips based on the FCA’s output and our own observations.   1. Less can be more “The best reports were structured in a way that made them easy for boards to scrutinise the key elements required by [PRIN 2A.8]”. Structure your report to ensure that it covers all the requirements of PRIN 2A.8.3R and facilitates capturing the review, decisions and approvals required under PRIN 2A.8.4- 5R. The report should cover customer outcomes, compliance and strategic alignment with the Duty. You also need to capture approval of the report, actions to address identified risks and/or instances of poor outcomes and any required changes to the firm’s business strategy to ensure ongoing compliance with the Duty. Start simple and build from there. Jumping straight into data can mean you get lost in the detail. Consider using R.A.G. ratings or some similar visual means of highlighting areas of elevated risk or issues. 2. Process makes perfect A clearly documented process for report production with roles, responsibilities, inputs and approvals can help manage and coordinate preparation of the report and demonstrate good governance. It also guards against key person risk if your business relies on a limited number of subject matter experts to develop the report. The FCA commented on the value of gaining input from across the business, including 2LOD and 3LOD (where appropriate). Ensure record keeping requirements are clear and do not be afraid of maintaining records of version control. 3. Prime the board and seize the quick wins Culture and conduct are a core focus of the Duty. The FCA wants to see SMFs actively leading firms by putting good customer outcomes at the heart of business decisions. Lots of firms do this but fail to capitalise on the opportunity to create an auditable paper trail. Priming your board with a documented reminder of their duties and examples of questions, then minuting discussion and (where applicable) debate in the meeting to approve the report, makes it considerably easier to demonstrate that the right behaviors are embedded. 4. Honesty remains the best policy We are in a challenging period of significant ongoing market and economic uncertainty, with a regulatory burden that has never been higher. The report is not about perfection; it is important to recognise the areas where you have gaps and set reasonable actions to address them. Actions should have clear owners, realistic timescales and – where possible – details of how success will be measured. We are in a challenging period of significant ongoing market and economic uncertainty, with a regulatory burden that has never been higher. Do not shy away from using the report to highlight successes but remember that a key objective is to show that management has its finger …

Ensuring our voices are heard
Jason Wassell discusses credit information reform

Published 17 April 2025

Over the past year, I’ve represented the Consumer Credit Trade Association on the Industry Working Group (IWG) tasked with developing proposals for a new Credit Reporting Governance Body (CRGB). It is an important and potentially far-reaching piece of work that could change the way credit data is overseen in the UK—and it’s vital that smaller and specialist lenders are not just consulted but properly considered in how the new regime is shaped. This is an example of how the CCTA seeks to speak up on behalf of our members, but also a wider constituency of lenders that have similar interests. The proposed CRGB is intended to improve transparency, consistency, and accountability in credit reporting. It would replace the current voluntary arrangements with a more formal structure, with responsibilities for setting standards, improving data quality, and overseeing credit reference agencies and data contributors. Those are laudable aims, and we agree that parts of the current system need improvement. However, we worry that the solutions are more suited for larger lenders than smaller firms. I am concerned that the FCA identifies several problems because of inconsistent data across three to four databases. However, their solution is to push for more databases and place the impetus on lenders to make the running. So, we have approached this work with a clear focus: to ensure that any new body works for all lenders, not just the largest. Smaller lenders play a vital role in the credit ecosystem, often serving consumers that others cannot, or will not borrow elsewhere. Their perspectives are essential to building a fair and inclusive credit reporting system. From the outset, the CCTA has pushed for three key things: proportionality, representation, and control of costs. I’m pleased to say that, through constructive engagement, we have seen some movement in these areas. Though I confess, I am still a little worried about how this might develop. We successfully secured an exemption for smaller lenders from the funding requirements of the new body. Under the proposals, firms below a defined turnover threshold—aligned with the definition of a small company by Companies House—would not be required to contribute financially to the CRGB. That’s a win, and it ensures that new obligations do not inadvertently price out the smallest, most specialist firms. Second, we argued that not-for-profit lenders should not be burdened with additional costs. I know that many of our commercial members could make a case that they create value for those often underserved, but I couldn’t push that through. So, the proposals now include an exemption for not-for-profit organisations, another positive outcome for a sector that plays an essential role in financial inclusion. Third, we made the case, repeatedly and strongly, that annual fees must be controlled, and that cost should not be a barrier to participation. That included spending some time to go line by line through some of the spending assumptions to determine where we could find efficiencies. This is an important moment for credit reporting in the UK. The direction …