Today the FCA published CP17/27: assessing creditworthiness in consumer credit

We are consulting on proposed changes to our rules and guidance on assessing creditworthiness in consumer credit.

This is in light of concerns about the risk of potential harm to consumers from poor culture and practice by firms. This could lead to consumers being granted credit which they cannot afford to repay, causing financial distress. It could also lead firms to develop processes which are unduly costly or restrictive.

In particular, we want to clarify:

  • the distinction between affordability and credit risk
  • the factors that should be used when deciding the proportionality of assessments
  • the role of income and expenditure information
  • our expectations around firms’ policies and procedures

We have undertaken research to inform our judgment.

Read the research findings below

https://www.fca.org.uk/publication/consultation/cp17-27-research-findings.pdf

We have also published an Occasional Paper:

https://www.fca.org.uk/publications/occasional-papers/occasional-paper-no-28-preventing-financial-distress-predicting

Who this applies to

This consultation principally affects:

  • consumer credit lenders
  • peer-to-peer platforms

 

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