FCA cuts reporting requirements in bid to minimise lenders’ costs

The FCA has halved the number of times lenders will have to submit performance data under the Mortgage Market Review from quarterly to half yearly in a bid to “minimise costs”.

In May this year the FCA published a consultation paper on new data reporting rules and today the regulator published its new data reporting requirements, which will take effect from 1 January 2015.

The original consultation paper was heavily criticised by the Council of Mortgage Lenders, which warned that the increase in information lenders would have to divulge under the MMR was a “sea change in the scale and nature” of what they currently provide.

It slammed the FCA’s cost benefit analysis of its data reporting rules as “flawed” and warned the burden will ultimately be absorbed by consumers.

It said that lenders already reported 31 separate items of data to the FCA on each of up to 250,000 new sales each quarter and the proposals would be a massive increase on this to 130 items, reported for the entire regulated loan book of around 7 million loans.

In particular it said the FCA had ”materially underestimated the resource implications of performance data reporting”, and that this would actually represent the biggest cost to firms.

Today the regulator said that it recognised “the additional burden of reporting performance data” .

As a result, while sales data will still have to be reported quarterly, performance data will now be required every six months from the second quarter of 2015.

It also said it had worked with the industry to reduce the number of data fields.

The FCA says: “This will significantly reduce the resource implications of reporting performance data. These amendments should minimise the costs to firms as much as possible, without undermining our ability to monitor and supervise the MMR.”

In response, the CML has praised the changes the FCA has made.

CML spokeswoman Sue Anderson says: “We welcome the FCA’s responsiveness to firms’ concerns about costs and complexity, which have resulted in the revised requirements.”

The FCA also faced criticism from bridging lenders about how much the data reporting requirements would effect lenders, in particular smaller firms.

The Association of Short Term Lenders had estimated that the manual inputting of sales data could cost £25 per case, with performance data around the same level. It also warned that this could impact competition, with larger firms better able to shoulder the financial burden.

However in response the regulator batted down accusations that the costs would impact competition, countering that lack of data inhibited its ability to analyse risks present in bridging lending and ”effectively supervise the market”.

The FCA says: ”Given the potential conduct risks in this sector we believe it is very important to collect loan-level data on bridging loans, particularly in light of the ongoing expansion of this sector.”