On 31 July 2017, the Financial Conduct Authority (FCA) released its consultation paper assessing creditworthiness in consumer credit.
The paper proposes changes to rules and guidance surrounding the assessment of creditworthiness in order to clarify regulatory expectations on firms.
The impact is likely to be primarily on firms who lend in the non-prime market, with the FCA’s emphasis on proportionality meaning those who lend to prime customers at low rates of interest or on small loans are likely to be less affected.
These clarifications make clear the:
Firms should conduct some analysis of their current approach to creditworthiness assessments in response to the FCA proposals. They should identify any gaps and ensure rationale of approach undertaken is documented and all relevant risks considered.
Overall the new rules: