Consumers and Lenders Alike Benefit from Instantaneous Reporting on Loan Activity
The Financial Conduct Authority (FCA) has recently consulted on new regulations, under which the FCA will expect high-cost, short-term credit (HCSTC) lenders to report consumer credit data in real-time and to at least two credit reference agencies by November 2014. The aim is to increase transparency and affordability in the industry.
“The HCSTC industry is at a pivotal point and has already changed dramatically under the new regulatory regime,” explained Russell Hamblin-Boone, Chief Executive of the Consumer Finance Association (CFA). “The widespread introduction of real-time reporting will have a very positive impact on the HCSTC market, benefitting lenders and consumers alike.”
In response, LendProtect, the leading provider of real-time underbanked consumer data and risk scoring solutions, is launching a Real-Time-Reporting certification programme to support lenders in adhering to the FCA’s requirements and to help ensure consumers can obtain the most affordable HCSTC loans on the market. Accredited lenders will receive a Real-Time Reporting badge to display on their website, storefronts and in their company materials. The badge assures consumers that the lender is reporting information instantaneously, as the regulator expects.
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“Consumers deserve the right to know which lenders comply with FCA requirements,” said Greg Rable, CEO of LendProtect’s parent company FactorTrust. “Not only does LendProtect’s badge signify integrity in lending, it also indicates the lender is concerned about addressing affordability and product customisation, providing both flexible lending options and a better service for consumers who have improved short-term credit history.”
The FCA’s consultation paper calls for lenders to share information about consumers, ideally in real-time. The document says: “The more accurate the assessment, the less risk there is of a firm lending to a consumer who may experience difficulty in repaying the loan. It would also reduce consumers’ ability to take out a number of different loans with different lenders.”
“We believe that real-time data reporting is best practice in the HCSTC sector, and any initiative such as the new certification programme will engender the best possible outcome for the consumer,” said Greg Stevens, Chief Executive, Consumer Credit Trade Association (CCTA).
The UK’s primary three credit bureaus currently only support reporting on a monthly or daily basis. In contrast, for the past five years, LendProtect has provided the facility for real-time data sharing to lenders throughout the UK. Lenders such as Stagemount Ltd (Quid Market), BB Credit Ltd (Bongaloans), Sunny Marketing Ltd (100 Pounds) and FCL Consumer Finance Ltd (Smart-Pig) have partnered with LendProtect to offer real-time reporting. In turn, they are able to ensure their borrowers are treated fairly and are offered products that best fit their needs from a convenience, cost and speed standpoint.
“Stagemount has been a LendProtect customer since 2011. We believe the faster lenders adhere to real-time reporting, the quicker we will all see an improvement in loan repayments, enabling us to provide our customers with more options,” said Courtney Vaughan, Stagemount Operations Director. “The LendProtect Real-Time Reporting certification programme will help borrowers and lenders in the long-run by promoting integrity-driven lending practices.”