For many consumer credit firms, data has traditionally been viewed as a by-product of doing business.
Applications generate data. Affordability assessments rely on data. Credit reference agencies receive data. Management information reports on data.
The focus has often been on ensuring systems work and regulatory reporting is completed accurately.
That mindset is beginning to change.
Recent developments, including the FCA’s Open Finance roadmap and ongoing reforms to the UK’s credit information market, point towards a future where the quality of a firm’s data will influence far more than regulatory compliance. It will shape lending decisions, customer outcomes, operational efficiency and, ultimately, competitive advantage.
Better data supports better decisions
Consumer credit has always relied on information.
What is changing is the quality and breadth of that information.
The FCA’s vision for Open Finance is to enable consumers and businesses to share financial data securely, giving firms a richer understanding of affordability, financial resilience and customer needs. At the same time, reforms to the credit information market and the work of the Credit Information Governance Body (CIGB) are intended to improve the consistency, governance and reliability of credit reporting across the industry.
These initiatives have a common objective.
Higher-quality data should lead to better decisions.
Data quality is now a governance issue
Historically, data quality was often viewed as an operational or IT responsibility.
Increasingly, it is becoming a Board issue.
Poor-quality data does not simply create administrative challenges. It can influence affordability assessments, customer communications, complaints, financial promotions and Consumer Duty outcomes. A missing or inaccurate data field can ultimately affect lending decisions and the customer experience.
That means governance around data is becoming just as important as governance around financial performance or operational risk.
Boards should be asking whether they understand where critical data originates, how it is validated and whether management information can be relied upon when making strategic decisions.
Good data creates better management information
Every Board relies on management information to make decisions… but management information is only as valuable as the data that underpins it.
Consumer Duty has significantly increased the importance of MI. Firms are expected to understand customer outcomes, identify emerging risks, monitor vulnerable customers and demonstrate that governance decisions are supported by meaningful evidence. None of that is possible if the underlying data is incomplete, inconsistent or inaccurate. The FCA has highlighted the importance of good quality data and management information in its examples of good Consumer Duty Board reporting, emphasising that firms should support conclusions with reliable evidence rather than headline metrics alone.
Well-governed firms recognise that good data does more than satisfy regulatory expectations. It allows trends to be identified earlier, complaints to be understood more effectively and customer outcomes to be monitored with greater confidence. It enables Boards to focus on strategic decisions rather than questioning the accuracy of the information presented to them.
Poor data has the opposite effect.
It creates uncertainty.
It undermines confidence in management information.
It makes root cause analysis more difficult and increases the likelihood that operational issues remain hidden until they become customer complaints or regulatory concerns.
Ultimately, businesses rarely fail because they lack information.
They fail because they cannot trust the information they have.
Competitive advantage begins with trusted information
Many firms understandably think about data quality in terms of regulatory compliance.
The commercial opportunity is often overlooked.
Firms with accurate, well-governed data are better placed to identify emerging customer trends, improve underwriting decisions, respond more quickly to changing market conditions and deliver more personalised customer journeys.
As Open Finance develops, access to richer financial information will become increasingly common.
The real differentiator will not simply be access to more data.
It will be the ability to trust it, interpret it and use it responsibly.
Preparing for the future
The FCA’s direction of travel is clear.
Open Finance, improved credit reporting standards and greater emphasis on data governance all point towards a regulatory environment where firms will increasingly be expected to demonstrate not only that they hold data, but that they understand its quality, limitations and impact on customer outcomes.
The firms that begin strengthening data governance now are likely to be better prepared for both future supervision and future competition.
The ALPH Legal & Compliance Perspective
At ALPH Legal & Compliance, we increasingly see data as one of the foundations of effective governance rather than simply a technology issue.
Whether reviewing Consumer Duty frameworks, governance arrangements, operational controls or credit reporting processes, our focus is on helping firms understand how data supports decision-making across the entire customer journey.
As regulation continues to evolve, the most successful firms will not simply collect more information. They will build the governance, controls and operational discipline needed to ensure that information consistently supports better decisions, stronger customer outcomes and greater confidence from regulators.