Bonafidee Advanced e-Forms – helping lenders assess creditworthiness and affordability

Key changes concerning the procedures for assessing affordability and creditworthiness have been outlined in a policy released by the Financial Conduct Authority (FCA) on 1st November, 2018.

The policy entitled “Assessing creditworthiness in consumer credit – Feedback on CP17/27 and final rules and guidance” advises credit lenders, peer-to-peer (P2P) platforms and trade bodies that they must “establish, implement and maintain clear and effective policies and procedures for assessing creditworthiness, including affordability.”[1]

The policy clarifies new rules and guidance around responsible lending and post contractual requirements stating that creditworthiness includes both credit risk to the lender and affordability risk to the borrower. A variety of methods and processes may be used to perform the assessments, either automated, manual or a combination of the two. Organisations may also assess credit risk and affordability together, or separately, as long as both are taken into consideration.

It is no longer acceptable to simply rely on the applicant’s income that was declared as a sole measure of affordability. Organisations need to take into account issues that are reasonably foreseeable and conduct a more detailed affordability assessment with expenditure and debt to income being a factor in the decision to offer credit.

Bonafidee supports this assessment process by capturing the income/expenditure detail speedily, securely and evidencibly using its Advanced e-Form technology. The interactive form can be used independently or part of an existing signing process and captures all the data necessary to make an informed decision. The data capture also provides an audit trail so if challenged, organisations can demonstrate the basis for their decision. This not only allows organisations to meet the FCA policy and guidelines but ensures GDPR compliance by ensuring that the necessary consent was in place in capturing this additional information.

Bonafidee Advanced e-Forms provides lenders with the tools, the know-how and the confidence to collect all the information required with utmost ease and efficiency, coupled with the highest degrees of data security, integrity and compliance.

Click here to find out more about Bonafidee Advanced e-Forms.