Product sales data - what are the requirements?

Some six months have passed since my Blog on the FCA’s consultation paper on Product Sales Data (PSD) requirements (cp23-21). In the blog, we looked at how firms should be using these requirements as a benchmark for the FCA’s expectations on what “good” looks like for their Consumer Duty MI.

The consultation has now been closed and the FCA has published the final details of the new PSD requirements here. At a simplistic level, the PSD introduces a requirement for firms to provide data to the FCA as part of three new routine submissions:

• Sales PSD - submitted quarterly

• Performance PSD - submitted quarterly

• Backbook PSD - a one-off submission

The regulator’s intentions are clear - with this data, they intend to monitor compliance with the Consumer Duty, gain an understanding of how firms operate and gain valuable market insight. This will allow them to make “quicker and bolder decisions” to prevent and respond to harm in the consumer credit market.

Here, I’ll take a quick look at the changes to the PSD requirements since the consultation, and the potentially significant impact this will have on firms across the consumer credit industry:

So, what’s changed as a result of the consultation?

Reporting Thresholds - The good news is that small firms may breathe a sigh of relief as the reporting thresholds have been raised from £500k to £2m – so those with less than £2m outstanding balances/new advances, don’t fall under scope.

Implementation Timelines – there’s also an extension on implementation dates, as these now stretch out from between July 2025 to May 2026 depending on the size of the firm (with larger firms receiving more time based on revenue thresholds).  

What is the likely impact on time and costs?

Resource & Financial impact - In the long-run this new framework will mean a reduction in the requests for ad-hoc data submissions, hopefully making regulatory reporting a more routine and efficient operating rhythm for firms.

However, in the short-medium term, the reality is that this is a huge change in reporting requirements which has the potential to have fundamental resourcing and financial impacts on firms. The FCA have stated that “firms just above the threshold in the consultation would, on average, see expected implementation costs of over 50% of relevant annual revenue” – this was the driver for the increase in the reporting revenue threshold to £2m. As such, those that are in scope should expect that the implementation of PSD is going to come at a substantial cost.

Why will this be so impactful?

The data points for the PSD are extremely granular. The data has been mapped out by the regulator here – and the number of data points that firms are required to submit runs deep! For example, on origination – the data is at a loan level, and requests information including sales channel, broker details, associated financial promotions – the list goes on….  The core data across the three submissions is split into the following categories:

1. Core agreement data

2. Borrower and affordability data

3. Charges and fees

4. Arrears and forbearance

Fundamentally, the regulator is requesting everything there is to know about your customer, the product that has been sold, the manner in which it has been sold and the way that the customer is being treated across the product lifecycle.

Establishing the systems and controls to collate, verify and routinely submit this level of data is going to require significant investment. 

So, what if firms aren’t able to produce the data?

It’s been said over and over again, the FCA is now a data-led regulator. Putting the implementation costs to one side – if you are unable to get this level of information together on your products and customers – firms will need to act quickly to plug the gaps.

The information required under PSD is mapped to the requirements of the Consumer Duty, and having any significant gaps in your PSD submissions may signal:

• ·       That you do not understand the make-up of your target market.

• ·       There is insufficient oversight over your distribution chains.

• You do not have the required data to be able to monitor against the delivery across the 4-customer outcome areas.

• ·       Your CD Board reporting will be inadequate. 

There has never been a more important time for Consumer Credit firms to scrutinise their capability to produce quality data on their customers, products, and services – firms should be taking action now.

We’ve got a great team with market leading experience in the Consumer Duty requirements and are already helping a number of firms improve their Consumer Duty MI and reporting frameworks.

Pease get in touch for a chat to hear how we can help.

Will.