CIMS: Reshaping the future of credit reporting

The credit industry is undergoing its most significant transformation in decades due to the Financial Conduct Authority's (FCA) Credit Information Market Study (CIMS), finalised in December 2023. This blog outlines key remedies focused on four themes:
 

• Governance

• Data quality

• Competition and innovation

• Consumer engagement.
   

Some remedies will be implemented by the FCA, others by the industry, and governance through joint effort.

New Governance: The CRGB
The introduction of the Credit Reporting Governance Body (CRGB) will revolutionise industry oversight, with a significantly broader scope than the previous Steering Committee on Reciprocity (SCOR). Expect greater industry collaboration and more agile change. Industry-led remedies aim for better consumer outcomes through increased engagement, improved data quality, and enhanced competition.

Proactive Steps Before CRGB
Due to the significance of the changes that are coming, In advance of the CRGB being in place, Equifax, Experian and TransUnion formed working groups, with the objective of identifying non-competitive quick win opportunities to evaluate and progress remedies so when the CRGB is formed they have an outline of what the  significant areas for change are so they can be addressed first.

At Equifax, we prioritised consumer benefits, focusing on:

• Consumer Disputes & Notice Of Corrections (NOCs)

• Statutory Credit Reporting (SCR)

• Common Data Format
   

Consumer Disputes & Notice of Corrections 
While a complete solution may depend on a common data format and mandatory data sharing, we've already made immediate improvements. Analysing common NOC reasons, we drafted standard templates. Over 50% of consumers adding NOCs now use these, with another 13% using a variation of this wording. We've also added clearer signposting to other CRAs NOC processes to reduce consumer friction.
 

For consumer disputes, Equifax looked at where the potential pain points for consumers are when they raise a dispute, with the main ones being:

• Ease of raising a dispute, status and ownership

• Need to raise a dispute

• Timeliness of resolution
   

We've worked with lenders on response times and data quality issues, leading to significant improvements.

Statutory Credit Reporting
The FCA wants consumers to have easier access to and engagement with credit information, with minimum friction. Equifax analysed the signposting on lender websites and found that 18% didn't mention how to obtain a credit report, and 23% only referenced one CRA. We proposed minimum standards for lenders to support consumer awareness, offering two options:

• Option A: Content can be adapted to mirror a lender’s own branding and include hyperlinks to each of the three large CRA websites (or Money Helper website).

• Option B: Links to standard wording hosted by each of the three large CRAs, directing consumers to a page where they can request a copy of their statutory credit report.
   

Working in partnership with the other CRAs, we're also researching consumer views on terminology in statutory credit reports, including with a vulnerable consumer focus group.

The output from these surveys will then be used to produce an outline of common terminology and ensure any new information is reflected consistently across in statutory credit reports.

Common Data Format
The FCA believes a common data format will improve data consistency and quality across CRAs. They also believe more frequent reporting will facilitate a more accurate and up-to-date view of consumers' credit commitments and could help lenders to make more informed lending decisions and mitigate against fraud.

The common data format workstream is undertaking a phased approach to lay the foundations to achieve a common data format across all data providers.

The initial phase saw the launch of a Standard Industry Reporting Format (SIRF), now accepted across Equifax, Experian, and TransUnion. This ensures clear definitions for reporting fields, and in advance of the FCA’s Mandatory Data Sharing proposals we are encouraging all new members to share the credit information with all CRAs.

The focus is now on the future phases and interlinked remedies.

Feedback on key priorities
We're surveying trade associations and their members, future CRGB members, SCOR members, and consumer groups on priorities like:
 

• More frequent reporting

  • Facilitating more frequent reporting of account activity. This could be dependent on the type of account and ‘event’ i.e. new account, change in balance, closure etc.
     

• Improvement of debt management reporting

  • Improved consistency to how arrangements, debt solutions and arrears are reported.  This may include additional flags or status codes.
     

• Review of Current Account Turnover (CATO) data

  • Investigate the standardisation of the CRA reporting requirements to ensure CATO data is used effectively and consistently. Review the existing CATO governance framework linked to the remit of the CRGB.
     

• Additional account types

  • Introduction of new account types to cater for new products in the market or future products that may be in scope for data sharing, including  the addition of new account specific fields.
     

• Enhanced flags

  • Review existing flag reporting, to introduce more detailed flags to provide better information and explore the reporting of multiple flags at the same time. This also includes a review of the proposed Payment Freeze flag for consumers and how that would be defined.
     

• Additional identity data

  • Explore new fields within the Standard Industry Reporting Format to support improved identity verification, AML and anti-fraud checks.
     

• Incorporating commercial data

  • Adding business data to the credit reporting framework, including bringing CCDS data into the remit of the CRGB.

If you’d like to get involved in our survey, use the following link to add your views.
Complete our CIMS industry survey here.

Next steps
After combining survey responses with FCA input, we'll hold workshops to create a plan for the common data format's future, giving the CRGB a clear understanding of industry goals.

Want to learn more?
Email us at contactus@equifax.com to ask any questions about the CIMS changes or to discuss in more detail.