CATO Unlocked: The Data Revolution driving fairer Lending

November 06, 2025 |

In an era defined by economic shifts and heightened regulatory scrutiny, the UK lending landscape has undergone a dramatic transformation over the last two decades.

From the Credit Crunch in 2007 to the introduction of the FCA in 2013 and the subsequent rollout of the CONC sourcebook and creditworthiness rules, the focus has consistently sharpened on responsible lending and tackling consumer indebtedness.

This evolution has been further accelerated by events like 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.

CATO Unlocked: The enhanced data revolution driving financial inclusion

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 change means 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 benefits: Granularity, inclusion, and confidence

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

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.
Income Verification Index (IVI) and 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.
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 detailed evidence allows lenders to move away from binary decisions. Instead of simply declining an applicant because of a low-level RAG status, lenders now have the confidence to say "yes" to more customers who are managing their finances responsibly, thereby driving genuine financial inclusion.

Data, expertise, and technology

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 is designed to combine the best of bureau, Open Banking, and modeled 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: Embracing 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.

With these enhanced insights, we are enabling the next generation of responsible lending, where decisions are not just compliant, but also faster, fairer, and built on the foundation of confidence.