CML challenges FCA data reporting proposals
In its August news letter the CML said the FCA wanted to increase the data requirements from 31 separate items on each of up to 250,000 new sales each quarter to 130 items for the entire regulated loan book of around seven million loans.
In its response to the FCA, the CML said: “Proposed changes by the FCA in lenders’ data reporting requirements represent a sea change in the scale and nature of what firms are required to do.
“With the reporting burden increased to this degree we believe it is vital that the FCA sets out clearly how it will use this greatly increased amount of data effectively so that firms better understand the justification.”
The CML wants the FCA to work closely with technical experts from the industry to ensure that the data it is demanding fulfils the FCA’s objectives effectively without placing a disproportionate burden on firms which will passed on to consumers.
Its response to the FCA makes three points which it wants the regulator to address before it publishes its final requirements.
The wording in the consultation paper, together with the level of proposed detail on affordability data, has caused members to raise concerns that the FCA intends to use the data to replicate firms’ underwriting processes on a loan-by-loan basis.
The CML wants the regulator to confirm it will not use the data for this purpose because it believes using the data in this way would lead to inconsistent and “erroneous” judgments on underwriting quality.
And the FCA’s cost-benefit analysis of its proposals is considered to be flawed by the CML.
It has suggested in its response that the costs are significantly greater than FCA estimated in the consultation paper.
In its final point the CML is urging the FCA to engage fully with it and with individual firms in a technical forum which it has offered to facilitate to iron out the numerous technical questions and to establish clear definitions before issuing its final reporting rules.
A spokeswoman for Santander said: “Santander has been actively involved in ongoing industry level discussions with FCA and CML around data reporting proposals. We will continue our dialogue with both parties whilst we await further details.”