UK FCA statement on credit builder products

The UK Financial Conduct Authority (FCA) has published a statement with findings from its review of certain credit builder products, which claim to improve consumers' credit scores by reporting regular payments to credit reference agencies (CRAs). The FCA found little evidence that these products significantly enhance credit scores for most consumers and highlighted potential risks, including misrepresentation of a customer's financial circumstances and facilitating access to unaffordable credit. Many of these products are unregulated, and firms often fail to clearly disclose their limitations. Following FCA engagement, five firms have ceased offering such products, while others have amended their models and marketing practices. The FCA continues to work with firms and CRAs to improve data reporting standards while considering whether it should take further action.

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