This is the second of two Bulletins about the FCA’s proposed new Consumer Credit Regulatory Return CR009.  The first Bulletin, Part 1, introduced the proposed changes to Consumer Credit Reporting (CCR) outlined in the FCA Consultation Paper and focussed on the background, rationale, costs and benefits of the proposals, and set out some ‘next steps’.  This Part 2 Bulletin focusses on what the enhanced reporting requirements proposals mean for firms, and the data the FCA is proposing to collect (which is significant).

Why the new return is being introduced

The existing returns (e.g., CCR002) require four pieces of information for each of the relevant activities.  This has helped give the FCA some understanding the importance of these to firms’ business models, with some additional information on income / revenue across all products.

The information currently collected does not provide enough information for the FCA to effectively supervise over 30,000 firms and the millions of customers they serve.  The non-specific way in which the information is requested leads, in the FCA’s opinion, to poor data quality from firms interpreting the question in a variety of ways.

What the new return will cover

We explained in the previous Bulletin that the proposed reporting requirements will apply to credit brokers (firms with the credit broking Permission) and firms which carry on the regulated activities of debt adjusting, debt counselling and providing credit information services. The FCA, for the purposes of the new reporting, now collectively defines these firms as ‘relevant ancillary credit firms’.

The proposed return will significantly increase the number of questions an average firm would need to answer, however many of the questions cover the same information but in a more insightful, and easier to interpret, way.

The new return will replace some of the existing returns for these activities and will include five mandatory sections of questions for all in-scope firms as follows:

• Permissions – regarding the regulated activities firms have undertaken in the past 12 months.
• Business model – regarding the financial products, goods, and/or services that firms are providing.
• Marketing – regarding the channels firms are using to target consumers.
• Revenue – total revenue from credit-related activities and non-credit related activities.
• Employees – regarding the number of employees and incentive and remuneration arrangements.

The return will use common industry terminology to aide understanding and, depending on a firm’s responses, will then present a range of tailored questions (which the FCA refers to as ‘branching logic’).  These questions are more readily aligned to the Permissions a firm holds, and will be driven in part by a firm’s responses to the mandatory questions.  If the responses identify a firm, for example, as a secondary broker introducing a consumer to finance a product or service, the firm will be presented with questions pertaining to the product and service they are broking.

How this will operate in practice

The Data

All Relevant Ancillary Credit Firms

All ‘relevant ancillary credit firms’ will be required to provide the following information:

Section / Themes	Description
Marketing	Marketing spend by channel e.g. online, social media, TV etc.
Employees	Details of total number of employees by FTENumber of sales / advice staff and commission model (employee remuneration) including where applicable the split between salaries and commissionDetails of training and compliance
Permission	Regulated activities undertaken in past 12 months.
Business Model	Understand different types of businesses and what financial product, goods and service they provide.
Revenue	Total revenue from credit-related activities and non-credit related activities.

In addition, each category of firm will be required to provide information relevant to their activities as outlined below.

Credit Broking

Section/Themes	Description
Business Model	What financial products are offered to consumers including finance for goods or services.
Goods and Services	Type of finance being offered, e.g., HP, PCP Maximum, minimum and average values of productTotal number of agreementsTotal value of agreementsMaximum, minimum and average value of finance entered into / APR / length of product term (Please note that the above data will be asked for as a total and broken down across different goods and services, i.e., motor vehicle finance, non-motor goods and services, consumer hire). For motor vehicle the firm will also be asked about the type, condition and value of vehicles finances and settlements involving the part exchange of a vehicle (total number, total value and average value of a settlement).   Whether the firm sells any add-ons and what these are.Whether Consumers are referred to another broker or lender following declinature by a lender (i.e. a specialist broker who deals with low credit scores).
Sales Channel	Volume of transactions for each sales channelWhether you operate personalised digital comparison toolsWhether you demonstrate, provide quotes or conclude sales for goods and services in a customer’s home
Relationships	Top 5, lender, broker and owner relationships namedNumber of referrals – successful and unsuccessfulCommission earned
Firm Remuneration	How the firm is remunerated, e.g. flat fee – introduction or percentage of transaction value.

Debt Adjusting & Counselling

Section/Themes	Description
Business Model	Type of service offered – whether it’s just advice, providing a debt solution or both.
Debt Advice	List of the different types of debt advice offered.Whether there are any charges for the advice given.What are the fees and commission for debt advice.Total number of consumers who enter debt advice.
Debt Solution	List of types of debt solution offered with volumes of total numbers and revenue of fees and commission earned.Total number of debt solution plans broken within 6 months and 12 months.
Network	Identify if a firm is part of a Network.
Call centre demand	Details of average calls received, dropped and waiting times.
Web chat demand	Details of number of web enquires and interaction with agent and whether it was successfully answered.
Referrals	Details of how consumers are referred to the firm.
Trade Association	Identify whether they are part of a trade body or association.
Prudential	To reflect the underlying prudential requirements in CONC 10.
Client Money	Details of how client money and assets are being held.

Providing Credit Information Services

Firms which are also providing credit information services will need to provide information on how consumers are charged (if applicable) for getting credit information including details of charges, total revenue from fees and number of consumers, and details of term subscriptions including cancellation, fees, number of consumers and total revenue.

Appointed Representatives

For Principal firms, the data return must include consolidated figures from all their Appointed Representatives (ARs) unless specified otherwise. This means the data provided will include both the Principal’s own activities and those of its ARs collectively; the return will not be split for each business.

Firms which have ARs will need to ensure that their AR oversight and management information controls include the collection of the required data, and that they can easily consolidate figures for regulatory reporting purposes. 

Permissions

Most firms were initially authorised in 2014 for regulated activities that allow for significant scope and adaptations that do not require Variation of Permission.  This means that current returns data is broad in nature and makes it difficult to readily identify the complexities of a firm’s business model (e.g. primary and secondary activity). Another focus of the proposed return is to improve information relating to the Permissions a firm holds and whether or not they are actively using those Permissions. The intention, therefore, is that the FCA will be better able to address any issues relating to firms which have incorrect or outdated Permissions on the Financial Services Register.  Where necessary, the FCA will remove those Permissions that are no longer being used.

Transition and Overlap with other Returns

Since the new return will ask more detailed questions specific to firms’ business models, some of the current consumer credit returns will be completely or partially replaced by the new CCR009 return.

For the avoidance of doubt, and notwithstanding some overlap in the data elements, consumer credit firms will still be required to submit the following returns (where they are currently required to do so):

• CCR001
• CCR002
• CCR003
• CCR006
• CCR007

This will be in addition to the applicable data elements in the new CCR009.

The new return will replace elements of:

• CCR002 – Consumer credit data: Volumes and
• CCR007 – Consumer credit data: Key data for credit firms with limited permission.

However, for threshold and fees data purposes, these returns will not be switched off and replaced entirely until the completion of all stages of the FCA’s work to improve consumer credit reporting.

Debt Management

The current regulatory return CCR004 – Consumer credit data: Debt management firms will be replaced, so will be ‘switched off’ and as part of this replacement.  The new return, however, will include the following questions from the existing CCR004:

• CCR004 1A – Total value of relevant debts under management outstanding
• CCR004 2A – Total prudential resources requirement
• CCR004 3A – Total prudential resources

The new return will also replace the current regulatory return CCR005 – Consumer credit data: Client Money & Assets, and also incorporate questions from the existing CASS survey (which some firms complete). An overview of the retained questions in relation to client money can be found in Section 3.15 of the Consultation Paper.

Reporting Frequency

The FCA does not propose to change the current reporting frequency which will remain as follows:

• Full permission firms with annual revenue from credit related regulated activities over £5m will be required to submit relevant regulatory returns on a 6-monthly basis.
• Full permission firms with annual revenue from these credit related activities up to and including £5m will be required to submit relevant regulatory returns on a 12-monthly basis.
• Limited permission firms will continue with an annual reporting frequency, both for the return under CCR007 and for questions relevant to them under the CCR009 return.
• Each firm will be required to submit a return on an individual basis even if they are part of a group.

The FCA is, however, proposing to change the scheduling of the returns and move from using firms’ accounting reference date to the calendar year for all in-scope firms. Feedback from firms suggested that this would make collating and submitting the data easier, make the data more consistent and increase the value the FCA can receive from analysing it.

The proposals will require firms reporting on a 6-monthly basis to provide all reporting figures, either financial numbers (e.g. revenue) or numerical values (e.g. number of credit agreements), on a cumulative basis. The return for the first reporting period should include figures for January through to June. The return for the second 6-month period should include figures for the entire 12 months, January through to December. This avoids unnecessary amalgamation of the 2 periods for yearly totals figures and is in line with other similar regulatory reporting such as Retail Mediation Activities Return (RMAR).

Timelines for Implementation

The FCA does not anticipate the new return will cause significant burden and are proposing that the rules come into effect immediately when it publishes the Policy Statement (which is expected to be early in Q1 2025). This means that the first reporting period will cover 1st January to 31st December 2025.

The first submission will be an annual submission for all firms. For those larger firms who will report 6 monthly, their first half yearly submission will cover 1st January to 30th June 2026.

To reduce the burden on firms, the FCA will increase the time given to submit the data from 20 business days to 40 business days from the end of the reporting period.

Firms should note that, if carried forward, these proposals will have the effect of requiring firms to submit data partially covering a period before the rules come into effect. This means that firms will need to be already collecting this data or in a position to be ready to collect this data by the end of this year.

The FCA believes that this is feasible and that the proposed data is readily available and easily collated.  The FCA, though, will welcome feedback about this, including whether there are particular areas which may prove more difficult or data which may not already be held.

What the FCA is asking for feedback on

The new return has been developed following significant engagement with the consumer credit industry, but the FCA would like to understand if there are business models, business structures, or activities for which these proposals could be amended to improve firms’ experience without diminishing the benefits they expect from the data.

The FCA is therefore welcoming any feedback on its proposals and, where respondents do have feedback, it asks that evidence be provided where appropriate, so that it can fully consider, and respond to, any points raised.

In particular the FCA is specifically asking firms to consider the following questions when providing feedback:

	Question
1	Do you agree with the questions, or data, proposed to be collected (e.g., the proposed format of, or guidance around, the data)? Please provide details
2	Will any of the proposed questions, or data, cause practical issues (e.g., requiring data you don’t currently, or would struggle to, collect)? If yes, please explain why, including whether this is because of your particular business model or the way in which you structure your business activities?
3	If you do not currently collect specific information which is included in these proposals, how difficult would it be for you to start collecting this data?
4	Do you agree with the proposed timeline for implementing these returns?
5	Do you agree with the proposed frequency of submissions, in line with a fixed calendar year?
6	Will the proposal for principal firms to submit consolidated data, including the activities of Appointed Representatives, cause any difficulties or lead to any potential issues? If so, please provide details including whether the data should be split by own activities and those of Appointed Representatives.
7	Do you have any general comments on our cost benefit analysis?
8	Once you have the new systems in place, what resource would you allocate to the collation and reporting of this data? Do you have any early indication of the likely scale of the costs involved?

What action do firms need to take

As outlined in the previous Bulletin The FCA has started sharing a prototype of the proposed return with ‘in scope’ and will continue to do so until towards the end of September.  This will allow firms to view the return in a similar way to how they will be required to submit the data in the future.

Submitting data through the prototype is completely voluntary but the FCA emphasises that it will help to assess whether the data that it intends to collect meets the needs set out in the Consultation Paper. Any data submitted in the prototype will only be used to test the design of the return and will not be considered for any general supervisory purposes.  It will also provide firms with a valuable opportunity to test how this will work in practice and therefore be prepared before any rule changes take effect.

A detailed guide for the completion of individual fields within the proposed CCR009 is included in Appendix 1 (Page 53) of the Consultation Paper.

We strongly recommend that firms take action now to satisfy themselves that they can fully meet the new data requirements and identify any potential areas where the FCA proposals may be difficult or not achievable in the proposed timescales. 

If there are any concerns, firms should take the time to provide feedback to the Consultation as once the Consultation ends there will be no further opportunity.  Without feedback it is likely that the FCA will continue with the proposals as stated.

Firms who have ARs should also take note that the new return will require consolidated data, to include data in relation to their ARs, and should be prepared for this (the FCA is openly asking firms if they feel the data of their ARs’ activities should be split from their own).

If firms would like to submit their feedback to the Consultation, they can do so by using the response form on the FCA website.  The Consultation closes on 31^st October 2024.