Asked by: Meg Hillier (Labour (Co-op) - Hackney South and Shoreditch)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, if he will bring forward proposals to secure full market participation in real-time data-sharing in the short-term credit market.
Answered by David Gauke
The Government has fundamentally reformed regulation of the consumer credit market. The Financial Conduct Authority’s (FCA) new, more robust regulatory regime is improving protections for consumers, including through the introduction of a cap on the cost of payday loans as required by Government.
The Government and the FCA have made it clear to payday lenders that real-time market-wide credit data sharing is key to more effective affordability assessments. In its November 2014 policy statement, the FCA set out there has been substantial progress made by the payday industry, with “the vast majority of the market now participating in real-time data sharing”. The FCA has committed to press the industry for further improvements, and has said it will make rules if it detects any loss of momentum.
The FCA can use its flexible rule-making powers across the consumer credit market where it deems necessary to support its objectives, including protecting consumers.
Asked by: Meg Hillier (Labour (Co-op) - Hackney South and Shoreditch)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what steps he is taking to introduce regulation which requires payday lenders and credit reference agencies to contribute data on a real-time basis.
Answered by Andrea Leadsom - Parliamentary Under-Secretary (Department of Health and Social Care)
The Government has made clear to lenders that credit data sharing is key to proper affordability assessments and promoting a competitive market, and more progress on recording and using payday lending data in real time is vital to addressing problems around multiple loans.
Having access to comprehensive real-time data about their customers’ outstanding commitments may help avoid consumers taking out a loan which they cannot afford to repay.
The FCA has already made clear to payday lenders and credit reference agencies (CRAs) in its policy statement, published in February, that they must identify and remove any data sharing blockages involving payday lenders as a matter of urgency.
In its consultation on the cap on the cost of payday loans, published in July, the FCA stated it expects to see more than 90% of current market participants - by market share and volume of loans - participating in real-time market-wide data sharing by November 2014, and more than 90% of loans being reported in real time. In order to improve the coverage of real-time databases, firms will also need to share data with more than one CRA.
The FCA stated that it will request information from firms and CRAs in order to get an accurate picture of whether the standards it has proposed have been met by November. If the FCA does not see sufficient progress by November or CRA coverage does not improve, it will consult on the introduction of data sharing requirements. It has also placed a requirement on firms to provide product sales data on high-cost short-term credit agreements every three months once they are authorised.
Credit reference agencies must ensure that that their use of personal data is compliant with the Data Protection Act 1998 (DPA). The Information Commissioner’s Office is an independent UK supervisory authority that oversees and enforces compliance with the DPA.