Financial Conduct Authority to gather more information from UK consumer credit firms
Published on 6th Jun 2024
UK regulator sets out final rules and guidance on new reporting requirements
![Close up of people in a meeting, hands holding pens and going over papers](https://oc-static.poweredbyproctors.co.uk/public/images/22/03/16/OC-IS_014.jpg?VersionId=1Tib4fKv.Nqk2w1K5VvdlIwCYl9oKOlf)
The Financial Conduct Authority (FCA) has released a policy statement on new rules on product sales data (PSD) reporting for consumer credit lending firms that addresses recent feedback on its initial proposal.
The regulator published the statement on 29 April following a consultation last autumn that sought views from firms on the introduction of the three new PSD returns into chapter 16 of the regulator's supervision rules.
The new reporting rules are aimed at creating a more in-depth picture of the sale and ongoing performance of consumer credit products. This will be achieved through introducing three new categories of PSD in respect of "relevant regulated credit agreements": sales data, performance data and back book data.
What's changed since the consultation?
The regulator has made a few changes to its initial proposal based on consultation feedback, with respect to threshold requirements, the implementation period, and the structure and content of the data elements.
The threshold for reporting PSD has increased from £500,000 in outstanding balances and/or new advances to £2 million. The FCA believes this will alleviate increased reporting burden on smaller firms, while maintaining sufficient coverage of the market.
Following concerns that the original deadlines were too short, the implementation period has been increased to 14 months for large firms (£20 million plus) and 20 months for smaller firms (between £2 million and £20 million). These changes impact firms in scope now and those who will come into scope in the future.
The FCA have also provided more clarity around data definitions, as well as removing some data elements from the return and adding further guidance to support firms.
Why is the FCA making these changes?
The FCA views data collection as vital in appropriately governing consumer-centred markets and cites the Consumer Duty as an important driver in this shift to data-led supervision.
Access to this data will allow the regulator to monitor firms' compliance better and make more accurate and informed decisions around supervision. Additionally, the knowledge afforded by this data will enable increased efficiencies in identifying and preventing serious harm in the consumer credit market.
It is not just the FCA who are anticipated to benefit from these requirements. According to the FCA, firms should see enhanced efficiency in dealing with reporting queries as the need for unanticipated data collection will be reduced.
Next steps
It will be important for firms to work out which of the two thresholds are relevant based on their business volume: outstanding relevant regulated credit agreements and/or new advances for relevant regulated credit agreements.
Milestones for in-scope firms
Threshold | Category | Reporting period | Due date sales | Due date performance and back book |
Threshold 1 Small firms | A*
| 1 January to 31 March 2026 | 30 April 2026 | 15 May 2026 |
B** | Seventh calendar quarter following the quarter in which the firm first reported in accordance with SUP 16.12.29CR | +20 business days from end of reporting period | +30 business days from end of reporting period | |
Threshold 2 Large firms | A* | 1 July to 30 September 2025 | 28 October 2025 | 11 November 2025 |
B** | Fifth calendar quarter following the quarter in which the firm first reported in accordance with SUP 16.12.29CR | +20 business days from end of reporting period | +30 business days from end of reporting period |
(*Category A: reported in accordance with SUP 16.12.29CR in respect of an annual period ending on a date between 1 April 2023 and 31 March 2024.**Category B: reported in accordance with SUP 16.12.29CR in respect of an annual period ending on a date after 31 March 2024.)
Full details of the relevant thresholds and reporting timescales are set out in chapter 3 of the policy statement.
Osborne Clarke comment
The policy statement mirrors the goals set out in the consultation paper and shows a commitment from the FCA not only to the Consumer Duty but also to firms in trying to create efficiencies in their reporting standards and metrics.
It appears the regulator has listened to firms' concerns around their ability to collect data and the associated costs, and has made changes to the proposals consulted on.
In terms of the reporting threshold, the FCA has had to try and find the right balance by setting a threshold that avoids burdening smaller firms but still gives them enough coverage of the market. They are clearly confident that the £2 million threshold does strike that balance. Additionally, the implementation period increase looks to be a more proportionate approach, particularly for smaller firms that would face the greatest burden.
The FCA has also tried to address concerns about how difficult it will be to gather this data by giving more guidance on what is required with the view to alleviating uncertainties, improving efficiencies and reducing costs for firms affected by the new rules.
Going forward, it will be interesting to see whether firms will spend less time dealing with reporting queries and unscheduled data collections and what impact this data collection will have on the FCA's supervision, enforcement and policy in the consumer credit market.
Sophie Mullarkey, Trainee Solicitor at Osborne Clarke, contributed to this Insight.