For many years, data accuracy was viewed primarily as a compliance or operational issue.
If customer records were inaccurate, credit reporting was inconsistent or information was missing, the consequences were generally considered through the lens of data protection, operational resilience or customer service.
That position is changing.
Increasingly, regulators are viewing poor data quality not simply as an information governance issue, but as a factor that can directly affect customer outcomes. As a result, data accuracy is becoming a conduct risk in its own right.
For consumer credit lenders and brokers, this shift has significant implications.
Why data accuracy matters more than ever
Almost every decision a consumer credit firm makes is influenced by data.
Affordability assessments rely on accurate customer information > Creditworthiness assessments depend on reliable reporting > Collections strategies are driven by account data > Complaints investigations often rely on historic records and customer interactions.
When the underlying data is inaccurate, incomplete or inconsistent, the quality of those decisions can quickly deteriorate.
The consequences are not theoretical.
Customers may be declined incorrectly, accepted when they should not be, provided with inappropriate support or subjected to unsuitable collections activity. In some cases, errors can remain embedded in systems for years, affecting both customers and firms long after the original issue occurred.
The FCA is increasingly focused on underlying data
Recent publications from the Financial Conduct Authority suggest a growing emphasis on data-led supervision.
Through Consumer Duty, customer journey analysis and outcome monitoring, the FCA is increasingly seeking to understand not only what decisions firms make, but what information those decisions are based upon.
This means firms should expect greater scrutiny of the quality, consistency and reliability of the data supporting their governance and reporting frameworks.
Increasingly, the regulator is not simply asking for management information or board reports. It is asking for the underlying data and rationale that support the conclusions being reached.
If that data is flawed, the credibility of the firm’s decision-making may be questioned.
Consumer Duty has changed the conversation
Consumer Duty has accelerated this shift.
Under the Duty, firms are expected to monitor customer outcomes, identify emerging risks and take action where necessary; all of these activities depend on data.
If the information used to assess outcomes is inaccurate or incomplete, firms may struggle to identify issues effectively. More importantly, they may reach the wrong conclusions.
A board report that relies on poor quality data can provide false assurance. A vulnerability review based on incomplete information may fail to identify customers requiring additional support.
The quality of outcomes is directly linked to the quality of information being used.
Credit reporting is under increasing scrutiny
The ongoing development of the Credit Information Governance Body (CIGB) further highlights the importance of data quality.
One of the primary objectives of the new framework is to improve consistency, governance and accountability across the credit information market.
Historically, firms have often reported information to multiple credit reference agencies using slightly different formats, interpretations or processes. While this has generally been manageable, it has also created inconsistencies that can affect lending decisions and customer outcomes.
The direction of travel is clear. Firms are expected to take greater ownership of the quality and consistency of the information they contribute.
Open Finance will raise expectations further
The FCA’s vision for Open Finance adds another dimension.
As firms gain access to richer and more dynamic financial information, expectations around data governance are likely to increase. More data can improve decision-making, but only if that data is understood, validated and used appropriately.
The future of affordability, vulnerability identification and customer outcome monitoring is likely to become increasingly data-driven.
This makes strong governance more important, not less.
Complaints, DSARs and operational reality
Many firms first discover data quality issues through complaints or Data Subject Access Requests.
A customer disputes information held on file. Records are missing. Different systems contain conflicting information. Historical decisions cannot be fully explained.
These situations often reveal broader weaknesses in governance and record-keeping.
What begins as a data issue can quickly become a complaints issue, a Consumer Duty issue or, in some circumstances, a regulatory issue.
This is why data accuracy should no longer be viewed as a standalone compliance function.
What firms should be doing now
The most effective firms are taking a proactive approach to data governance.
This means understanding where data originates, how it moves through the organisation and how it supports decision-making. It also means testing data quality, identifying inconsistencies and ensuring that governance frameworks keep pace with regulatory expectations.
Particular attention should be given to areas such as affordability assessments, credit reporting, complaints handling, vulnerability monitoring and management information.
If firms cannot confidently explain how their data is created, validated and maintained, they may struggle to demonstrate effective control.
A conduct issue, not just a data issue
The regulatory direction is becoming increasingly clear.
Data accuracy is no longer simply about compliance with data protection requirements. It is becoming a key component of customer outcomes, governance and regulatory oversight.
As supervision becomes more data-led and outcome-focused, firms that invest in strong data governance will be better positioned to demonstrate compliance, support good customer outcomes and manage regulatory risk.
Those that do not may find that data quality issues become much more visible than they were in the past.
How ALPH Legal & Compliance Can Support
ALPH Legal & Compliance supports consumer credit firms in reviewing and strengthening data governance frameworks, credit reporting processes and outcome monitoring arrangements.
We work with firms to assess data quality, identify governance weaknesses and ensure that information used to support affordability, vulnerability, complaints and Consumer Duty oversight is accurate, reliable and fit for purpose.
As data continues to move to the centre of regulatory supervision, firms that take a proactive approach today will be far better positioned to manage tomorrow’s risks.
To discuss how ALPH can support your firm, speak to our compliance experts.