How well do you assess your customers’ creditworthiness?
What’s happening?
The FCA has recently started an investigation into Amigo Loans, a London Stock Exchange-listed guarantor lender, to examine whether its assessments of customers’ creditworthiness were compliant with FCA rules.
The FCA has not released a statement but, according to Amigo’s press release, the investigation will cover Amigo’s lending from November 2018, which is when new FCA rules came in to protect consumers from unaffordable lending and govern how lenders assess borrowers’ creditworthiness. The rules revised the definition of ‘creditworthiness’ as consisting of credit risk and affordability, meaning that lenders must now consider both the risk to themselves that the customer will not repay and also how difficult it may be for the customer to meet repayment obligations.
Additionally, there has been an increase in complaints about Amigo’s conduct since the new rules came into force, which will have raised the lender’s profile on the FCA’s radar.
What do you need to do?
This investigation is testament to the FCA’s increasingly robust approach to consumer lending over the last few years and its willingness to enforce the rules with financial penalties (Wonga paid compensation of over £2.6m to around 45,000 customers). So far, the attention has been given to the largest, highest-profile lenders, but over time the FCA’s attention may well trickle down to more modestly sized lenders.
How can we help you?
If you’d like to know more about FCA consumer credit regulatory requirements or any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.