The FCA has published a policy statement setting out its final rules and guidance on assessing creditworthiness in consumer credit. The policy statement summarises and responds to the feedback the FCA received to the July 2017 consultation paper (CP12/27).
In particular, the changes set out in the policy statement clarify the FCA’s existing rules and guidance in chapter 5 (Responsible Lending) and Chapter 6 (Post Contractual Requirements) of the Consumer Credit Sourcebook; and the application of the general requirements on firms in the Senior Management Arrangements, Systems and Controls Sourcebook.
The FCA has also amended some of its original proposals following the feedback it received. The changes 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; and
- the FCA’s expectations regarding firms’ policies and procedures.
The final rules and guidance come into effect on 1 November 2018.