Brexit and The Credit Reporting Agencies

The Brexit is a hot topic, hugely debated, and currently one of the top news topics. In part due to the fact on October 31 of this year, we need to have a deal in place, or we will by default have a “no-deal” Brexit.

Brexit is also in the news a lot as it is a platform that whomever is to be our next Prime Minister is standing on. All candidates volley the Brexit back and forth, each with their own ideas and agenda as to how it should go down.

One question some people have, in addition to the hundreds of other questions, is how will the Brexit affect our insolvency laws here in the UK, and also our credit rating systems, and credit reporting agencies here in the UK?

Not much has been said of this, but there have been a few leaks and things mentioned recently.

In addition to all the other aspects and things we need to sort out when we leave the EU, we also need to address our credit systems here in the UK, and also our credit reporting agencies.

Currently we re a part of the EU, and there are regulations in place in the EU, that we must follow as we are a part of the EU. There are rules and laws, and the such to allow companies to work here and in the EU, and also be regulated here and in the EU.

Once we leave the EU, if without a deal, and these matters are not addresses, we are on our own, we will then regulate ourselves, so to speak.

And one of those areas is in the credit reporting business, and the agencies that report our credit files and credit scores.

What is ESMA?

ESMA stands for the European Securities and Markets Authority, and one aspect of what they do is to regulate or oversee CRA’s or credit rating agencies in the EU. This also includes our CRA’s here in the UK, however, without a deal to the Brexit, this all will change.

A statement by the ESMA outlines what will occur with the CRA’s in the UK should we leave the EU without a deal.

In essence this statement says credit rating agencies in the UK will be labelled and treated as “third-country” CRA’s and their registrations will be “withdrawn” and they will no longer meet the conditions as CRA’s as outlined in the EU.

FCA to Investigate CRA’s

The FCA or Financial Conduct Authority is the regulator in the UK for all things credit. If you wish to loan money, be a bank, most things financial, you need to be registered and licensed by the FCA.

This means that when the UK leaves the EU, the FCA will then become the regulator for CRA’s then in the UK.

The FCA has stated, “CRAs issue credit ratings which are opinions on the creditworthiness of an issuer or security. Firms may use credit ratings in the calculation of their capital requirements and for assessing risks in investment activity. If the UK leaves the EU without a withdrawal agreement, we will assume responsibility for registering and supervising CRAs in the UK.”

This means the FCA will regulate and govern the credit bureaus here in the UK.

FCA to Review CRA’s and “Credit Information Market”

Credit scoring is a huge deal and not just for taking out a loan. It can be used in issuing insurance policies, and also for some jobs.

So the agencies that issue our credit scores, need to get it right, and they need to be regulated to insure they get it right.

The FCA is now going to “launch an investigation” into the credit reporting agencies, to see how they operate, and what their impact is on us as consumers.

The Director of Strategy and Competition at the FCA, Christopher Woolard stated, “We have launched this market study as we have identified concerns about the coverage and quality of credit information, the effectiveness of competition between credit reference agencies, and the extent of consumer engagement.”

Through the study we will seek to get a better understanding of how this vital market works and will identify remedies, where appropriate, to make it work more effectively for credit information users and individual consumers. This includes considering whether vulnerable customers are disproportionately affected by the way credit information is used, and whether any alternative approaches might deliver better outcomes for consumers.”

So the Brexit is to have some changes on our credit systems, how they are regulated, and also new licensing requirements.

Leave your comment

<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.