Responsible Lending and Borrowing Code

An important addition to the CCCFA was the introduction of lender responsibility principles.  The responsibility for assessing loan affordability is mandatory and the lender needs to ensure that the loan is:

• suitable
• affordable
• understandable.

This means that lenders are required to ask detailed questions before giving out credit.

What do you think that these terms ‘suitable, affordable’ and understandable’ mean?

In addition, FinCap, in collaboration with Financial Services Federation, developed a Code of Responsible Borrowing which aims to help borrowers understand their obligations when borrowing money. This includes to:

• prepare a budget
• look at other options
• understand all the terms of the contract
• provide information as required
• keep the lender informed.

The Code of Responsible Lending is mandatory and legally enforceable.

The Code of Responsible Borrowing is a guideline only.