Here at Uncle Buck we are seeing a greater proportion of complaints to us being about the affordability of lending, some complainants allege that we did not carry out proper checks prior to advancing the funds. It would be fair to say that there has been a definite spike following the publicity given to other lenders and redress offered by them to their customers. However, one size does not fit all and all lenders have different methods of assessment.
We start with an application
It is important to remember that the first stage in any loan advance is the application. Consumers who seek to borrow need to apply first, a decision which we understand is often not taken lightly. A short term loan will not be funded without an application and it is the consumer who must be the driver of this.
Applications are passed through a variety of checks. Many of these are carried out through online interfaces with Credit Reference Agencies and can be done with minimal delay, and are largely invisible to the applicant, but this does not mean the checks are not being carried out. Furthermore, just because an applicant is not specifically asked about a particular item does not mean it cannot be adequately assessed.
If an applicant receives a provisional decision, they will be presented with Important Information about their loan (adequate explanations). This explains, amongst other features of the proposed loan, that it is not suitable for those in financial difficulty and would be expensive as a means of longer term borrowing (and is not suitable as a means of longer term borrowing).
The loan agreement
Further information about the loan, including the repayment terms, what happens if a repayment is missed and the total amount repayable, are presented in the SECCI and in the loan agreement. There can therefore be little opportunity for misunderstanding or a lack of transparency about these terms.
In order to proceed, the applicant must sign the consumer credit agreement. This is done electronically, however a loan cannot proceed if the applicant does not sign. The assumption is then, that an applicant who signs the documentation does wish to proceed to borrow the amount stated on the documentation and is satisfied with the repayment terms.
At Uncle Buck, we carry out further checks on applications. We may ask for supporting information or verify details provided by applicants against third party sources, including affordability checking. Applicants who change their minds before the loan is funded – some do – have their application cancelled. Post funding, a customer has 14 days to exercise their right of withdrawal, this is made clear in all of the pre-contractual and contractual documentation, so a customer has 3 potential opportunities to see it.
After the 14 day withdrawal period, all customers have a legal right to partially or fully early settle, and may receive an interest rebate.