Walker Morris: Assessing creditworthiness in consumer credit – FCA publishes final rules and guidance
White Papers | 14/08/18
The results of a large-scale survey by the Financial Conduct Authority (FCA) in 2017 indicated, among other things, that: 75% of UK adults had one or more consumer credit products or loans in the previous 12 months; 4.1 million people were “in difficulty” because they had already failed to pay domestic bills or meet credit commitments in three or more of the previous six months; and 50% of UK consumers showed one or more characteristics of potential vulnerability.
Against that backdrop, and the FCA’s wider scrutiny of the consumer credit sector, the FCA consulted in the second half of 2017 on proposed changes to its rules and guidance on assessing creditworthiness in consumer credit, with a clear focus on affordability. Final rules and guidance were published on 31 July 2018 and come into force on 1 November 2018. Consumer finance specialist Jeanette Burgess considers the changes and what they mean for lenders.