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The law allows CRAs to record information on an individual’s credit worthiness, which can then be supplied to banks, building societies, retailers or other providers of credit. All CRAs hold similar information about individuals. The information provided by CRAs fall into two main categories – public information and credit account information.

This information is retained by the CRA for six years. This lets lenders check, when someone applies for credit, that the person applying has repaid other lenders in the past and the size of any outstanding loans.

Lenders are bound in what they can provide to CRAs and the use they make of it by the Standing Committee on Reciprocity (SCOR). This is an industry group whose purpose is to define the rules regarding the reciprocal use of information.

By virtue of the Financial Services Act 2012, as of April 2014, regulation of the whole consumer credit market passes to the Financial Conduct Authority (FCA). Regulation will henceforth be by FCA rules rather than by the less flexible structure of legislation.

There will be a new activity of providing credit references that will replace the current activity of operating a credit reference agency. The new activity only applies to a firm if its business primarily consists of providing others with information relevant to someone’s financial standing and collecting such information for that purpose. Consequently, only firms whose main business activity is being a credit reference agency are likely to meet the criteria to hold a permission for this activity.

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