The Financial Conduct Authority (FCA) has recently published policy statement PS24/3, introducing new mandatory Product Sales Data (PSD) reporting requirements for consumer credit firms. This significant change will impact how firms collect, manage, and report data to the FCA.
In this blog post, we'll break down the key aspects of these new requirements and offer guidance on how your firm can prepare.
Background and rationale
The FCA took over consumer credit regulation from the Office of Fair Trading in 2014. Since then, they've been reviewing the regulatory landscape to improve market oversight and consumer protection. The new PSD reporting requirements are a result of this ongoing process.
The FCA's goals for implementing these changes include:
- Better understanding of firm operations and market insights
- More effective authorisation and supervision of firms
- Quicker intervention in cases of potential consumer harm
- Reduced reliance on ad hoc information requests
These returns will play a fundamental role in the FCA’s oversight of the consumer credit market allowing them to focus interventions where they are most needed and where they will have the biggest impact in protecting consumers.
Who is affected by the PS24/3 changes?
The new requirements apply to:
- Firms engaged in consumer credit lending
- Firms that advise, represent, or provide software to support regulatory reporting for consumer credit lenders
To be subject to these requirements, firms must have at least £2 million in outstanding balances and/or new advances.
PS24/3 key requirements
In a nutshell, this is a new requirement for impacted firms to submit quarterly data to the FCA. The data elements to be reported on are significant in both quantity and complexity, and for some firms, not all elements will likely be captured and stored, and/or fed through to data warehouses.
Here’s a quick summary of the key requirements:
- Quarterly reporting: Firms must submit new PSD returns on a quarterly basis.
- Three components: The returns comprise Sales PSD, Performance PSD, and Back Book PSD.
- Comprehensive data: Firms will report on core agreement data, borrower affordability, charges, fees, arrears, and forbearance.
- Extensive data points: A total of 347 data elements are specified, though not all will apply to every firm.
- Implementation timeline: The first returns are due as early as October 2025, with a phased approach to implementation.
Given the stated FCA timescales, this will require considerable focus in the immediate short term. Firms affected by the changes will need to ensure their reporting is in line with the changes set out in the FCA policy statement. Plus, they will need to implement the changes within the prescribed timescales, which are that this will be phased in over time with the first returns due as early as October 2025.
Additionally, these changes will require budget allocation in the coming Financial Year, reiterating the need for early review.
PS23/4 challenges and considerations
The scale of these new requirements is significant and may pose challenges for many firms. Here are some key challenges and considerations to pay attention to:
- Data availability: Not all required data elements may be currently captured or easily accessible.
- System changes: Firms may need to implement new processes or modify existing systems to collect and store the required data.
- Resource allocation: Significant time and budget may be required to meet these new requirements.
- Data quality: Ensuring the accuracy and reliability of reported data will be crucial.
Preparing for PS24/3 compliance: Recommended actions
What’s clear is that the scale of this requirement is significant. Subject to the size of impacted firms, some may have the technical capability to manage this in-house although clearly this will lead to lost opportunity by shifting resources to PSD reporting. For other firms, this will require the introduction of significant new processes and other changes, and so it is likely that external support will be required.
To meet the FCA's deadline and ensure compliance, we have pulled together the following recommendations:
Side note: this is not exhaustive and there is no one-size-fits-all answer, so early action is essential in order to be in a position to be compliant by the FCA deadline.
1. Conduct a data audit
🟡Review your current data availability and identify gaps in your collection and storage processes.
A review and assessment around what data is available already, and where system changes are required to collect the data required.
Jaywing has a team of specialist data scientists who can support this via a Data Audit—this is a service we provide day-in-day-out to our clients and will provide essential information to underpin any next action required.
2. Develop a data integration strategy
🟡Ensure that all required data can be reliably brought together in a central data store, such as a data warehouse or data lake.
Ensure existing and new feeds can reliably bring the required data together into a central Data Store – for example a Data Warehouse or Data Lake. This can either be a brand-new entity, or an extension to something already in place.
Jaywings’ data engineering team has specialised knowledge and experience in this and can help design and deliver this requirement quickly, efficiently and cost-effectively.
3. Create FCA data feeds
🟡Develop standardised processes for generating the required quarterly reports.
At Jaywing, as these are standardised across all our clients, we can make this transition straightforward. For a Jaywing-hosted solution, we have an approach which provides tested and approved outputs as required for this.
4. Implement data quality measures
🟡Establish ongoing validation processes to maintain data accuracy and reliability.
Data Quality can be an issue when dealing with captured data. An ongoing validation of the data to ensure that no quality issues are creeping in is imperative.
A Jaywing Data Audit will enable a robust assessment of this, and enable ongoing control to manage and maintain quality over time.
Get ahead of PS24/3 requirements
The new FCA PS24/3 requirements represent a significant shift in regulatory reporting for consumer credit firms. With extensive data points to be collected and reported quarterly, firms face substantial challenges in terms of data management, system integration, and resource allocation. However, these changes also present an opportunity for firms to enhance their data capabilities and gain deeper insights into their operations.
Key takeaways:
- Act early: With the first reports due in October 2025, early preparation is crucial.
- Assess your readiness: Conduct a thorough data audit to identify gaps and necessary system changes.
- Invest in data infrastructure: Ensure your systems can handle the new reporting requirements efficiently.
- Prioritise data quality: Implement robust processes for data validation and quality control.
- Seek expert help: Consider partnering with specialists like Jaywing to navigate these complex requirements.
By taking proactive steps now, your firm can not only ensure compliance with PS24/3 but also leverage this opportunity to improve your overall data strategy. Remember, the journey to compliance starts today – don't wait until it's too late.
How Jaywing can help
At Jaywing, we specialise in helping firms navigate complex regulatory requirements like these. Our services include:
- Comprehensive data audits
- Data engineering and integration
- Standardised FCA reporting solutions
- Ongoing data quality management
With our expertise, you can ensure a smooth transition to the new PSD reporting requirements while minimising disruption to your core business activities.
As Nicholas Hurst, Deputy Chief Risk Officer at One Savings Bank puts it; “We were quickly struck by the level of Jaywing’s expertise and the success of its models in ensuring adherence to regulatory requirements and managing model risk effectively. We’re really looking forward to working with Jaywing on our IRB programme, which is a vital strategic project for us.”
Next steps
The clock is ticking on these new requirements. Early preparation is key. To assess your readiness and develop a tailored action plan, contact Jaywing today. Our team of experts is ready to guide you through every step of the process, ensuring you meet FCA deadlines and maintain regulatory compliance.
Don't let these new requirements catch you off guard. Act now to protect your business and ensure compliance with FCA regulations. Find out more about our PS24/3 services.