Rebuttals guidance for NFDA members

Overview of the evidence needed to support rebuttals.

Following consultation with lenders and credit brokers, it is clear that requests for information from the former to the latter are likely to focus on the following two key areas:

• Evidence to support rebuttal of the presumption of unfairness on the grounds of a non-operational tied arrangement: the Non-Operative Tierebuttal.
• Evidence to support rebuttal of the presumption of loss or damage for high commission agreements: the No Better Deal rebuttal.

Requests should focus on necessary information that the lender does not already have access to.  If you do not respond within a month, the lender must send you a letter requesting compliance within 14 days.

The lender must include within its monthly reporting to the FCA on progress with delivery with the Schemes, data on requests for information made, requests for information complied with and follow up letters issued.

The FCA will be monitoring compliance with information requests very closely. It will take supervisory and or enforcement action accordingly.

It is important to note that the parts of the Schemes requiring response within a month, the issuing of a letter requesting a response within 14 days, and the monthly reporting are suspended until the conclusion of proceedings at the Upper Tribunal. However, given the scale and importance of the task at hand, we strongly advise lenders and brokers to continue to collaborate on evidencing the two rebuttals under consideration to avoid the consequences of breaching future time constraints likely to be applicable in due course.

Credit brokers are strongly advised to commence work as soon as possible to understand what information they hold and how it might be made available – in compliance with competition law and data protection legislation – if they have not done so already.

Information that lenders are likely to request from credit brokers

NOTE: It is expected that lenders will only request information to the extent that it is necessary and not already in their possession.

The Non-Operative Ties rebuttal

Regarding non-operative ties, it will be particularly important to understand if you hold the following, and if so for what time periods and in what formats:

1. The distribution by number or value of initial introductions made to lenders over the calendar or financial quarter.
2. If this data is unavailable, the distribution by number or value of credit agreements entered into over the calendar or financial quarter, by lender.
3. Internal policies, procedures or other documents which set out the credit broker’s approach to the introduction of consumers to lenders at the relevant time.
4. Agreements or communications which demonstrate that the lender had agreed to forgo any reliance on the tied arrangement.
5. Evidence of the existence of tied arrangements to which the credit broker was a party other than the tied arrangement with the lender at the relevant time.

This list is not exhaustive. Other evidence may be requested or supplied.

The No Better Deal rebuttal

Regarding the No Better Deal Rebuttal, it will be particularly important to understand if you hold the following, and if so for what time periods and in what formats:

1. IT system records or screen shots showing the loan application and the range of APRs available to the customer.
2. Email or system notes showing APRs considered by the credit broker.
3. Broader information on APRs available and the criteria required by the lenders sufficient to enable a reasonable assumption to be made as to the rates available to customers during the relevant time period.
4. Agreement specific information including but not exclusive to customer credit profile, and product type.

• All or some of the following agreement level data:

Lender ID	Customer credit score
Loan reference number.	Loan amount
Date of proposal	Loan term
Vehicle registration	Actual APR
Vehicle age	Offered APRs from other lenders at the time

Locating data (Do we hold it or not?)

Credit brokers should conduct “a thorough search” of the records they hold relevant to agreements entered into during the period from 6 April 2007 to 1 November 2024. They should explore all relevant customer and business records to understand what information is held and where it is held. They should understand which pieces of information relate to which aspects of the rebuttals being considered.

This should include both digital and hard copy records. It should include customer records, management information, and corporate records related to systems, processes and policies. Credit brokers may find it useful to prepare a high-level summary of what information they hold – and what information they do not hold – to assist them with responding swiftly to lender requests.

Conducting a thorough search

Overall, at the end of a thorough search, the Credit Broker should understand:

1. What information it holds in relation to the request received.
2. Where its agreement level data is held and which of the main data points are covered.
3. Where its management and monitoring information is held and in what format.
4. Where its policies and procedures documentation is held, and in what format.
5. The populations of agreements that included: a) Discretionary Commission Arrangements; b) tied arrangements; and/or c) arrangements for commission being payable at or above the high commission threshold (39% of the total cost of credit AND 10% of the loan amount).

All relevant IT systems and physical records must be checked including those from businesses that the credit broker has acquired.

Accessing data (retrieval and reconstruction):

Once data is located, credit brokers should consider how the required information can be assembled into the required format from the records the business has available.

Where relevant evidence is held in hard copy format, credit brokers will need to prepare plans to digitise this information. For clarity, credit brokers do not need to digitise paper records in anticipation of a request, but must ensure that they have sufficient understanding of how they would digitise these and provide them to a lender – or lenders – within the CONRED specified time frames if required.

Relevant information is likely to be held across multiple systems and in a range of formats. Credit brokers must have a clear understanding of what these look like and how they can be made available.

Using data (format)

Once the availability of data has been assessed, consideration will need to be given to the format in which it is provided to the lender. CONRED is clear that the information must be provided in the format requested by the lender or, if that is not reasonably practicable, a reasonable alternative format that still enables the lender to use the evidence requested for the purpose for which it has been requested.

Some lenders may engage a third-party provider to assist with the collection, formatting and use of credit broker data, and to help them manage the associated competition law and data protection risks. Credit brokers should cooperate fully with such parties duly engaged by lenders as though they were the lender themselves.

A suitably qualified individual within the credit broker firm will need to take responsibility for the conducting of searches, the provision of data, and any confirmation that data is not held where appropriate. In this context a suitably qualified individual will need to be the appropriate SMF under the Senior Managers and Certification Regime.

Lenders should be able to audit information on reasonable request. Any such audit must be conducted within the bounds of competition law and data protection requirements, and may be undertaken by an appointed third party at the lender’s request.

Data transfer and storage.

Requests for information at agreement level is highly likely to contain sensitive personal information that must be managed in accordance with the relevant data protection legislation. Both lenders and brokers should already have robust systems and processes in place for managing personal data. These systems and processes should already be adequate to manage the risks involved with compliance with the scheme.

However, we strongly recommend that all firms review their data protection arrangements from a scheme compliance perspective and update accordingly.

Compliance with the ISO 27001 standard on information security management systems should be sufficient.

Similarly, we cannot stress strongly enough the need to consider the competition law implications of data being transferred. You must not make sensitive or strategically significant business information, such as pricing, margins, discounts, trading terms, third-party supplier arrangements, or market share relating to one firm available to any of its competitors.