There are rules in place for all UK businesses to ensure that they are lending money responsibly. As part of the rules laid out in CONC, lenders should be carrying out affordability checks when approaching lenders to borrow money and buy products. This includes loans and credit cards.
The affordability checks should be proportionate to the amount borrowed. The types of checks required by the lender will differ depending on factors such as the amount you have borrowed, the length of time you have borrowed money for and if you have borrowed from the same company multiple times. Ultimately these checks should be performed to ensure that you are able to repay your loaned money back.
Have you used any of the following money lenders:
There are many different lenders and products in the UK – ranging from loans to credit cards. Affordability checks should be proportionate and so will vary in how thorough the background checks need to be. The type of affordability checks the lender needed to do will depend on various factors, including the amount of money being borrowed, over what length of time, and whether you were already a known customer of the lender (with a history of previously borrowing with them). Essentially though, the lender should be checking to establish that you can sustainably repay everything you owe over a reasonable period of time or the entire term of the credit agreement. Repaying sustainably means that it should not cause you too much difficulty to pay month after month from your income or savings. And it certainly wouldn’t be right if you had to borrow even more money just to afford the repayments on your existing borrowing.
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