Affordability of credit and the way firms assess this is a key
focus area for the Financial Conduct Authority (FCA). The FCA is
using the authorisation process as a means of gathering information
on the affordability assessment processes used by firms. It is
likely to use this information to determine whether or not further
rules or guidance are required in this area. This blog explores the
insights that we have gained from both our client work and our
interactions with the FCA. So what have we learnt and how
should the affordability assessment rules be applied in
practice?
Proportionality - what does this mean in practice?
The Consumer Credit Sourcebook (CONC 5) states that an
assessment of creditworthiness and affordability should be
proportionate to the type of credit being applied for, but what
does this mean in reality? Much of the assessment will depend on
the customer to whom you are lending. There are a number of
questions which you could consider,
