CCD – How Dealflo helps lenders

It has been years in the making, subject to countless changes and rumours but the Consumer Credit Directive is now with us. So what does it mean for lenders and how can Dealflo help?

In summary, the CCD has 5 main implications for lenders:

1. The CCD sets new requirements on advertising information which must now include the interest rate and any charges included in the total cost of credit to the consumer with a clear indication of the annual percentage rate of the loan (APR) so a new standardised APR has been introduced across the whole of the UK and the EU.
2. Finance houses must provide consumers with detailed pre-contract and contractual information, in a standard format to help ensure the customer is creditworthy and can manage the loan they take out.
3. All customers have a period of fourteen calendar days to exercise a right of withdrawal from a credit agreement without giving any reason and have the right to early repayment of the finance agreement.
4. All Finance houses must satisfy themselves that customers are creditworthy on the basis of sufficient information obtained from both the consumer and widely used finance industry databases and information sources during the finance application process.
5. If a credit application is rejected on the basis of the data obtained by the finance house all customers must be informed immediately and without charge, that this has occurred and the industry database used to make any decision clearly identified.

Dealflo helps the lender in 3 main areas:

Pre-contract Information

All stages of the customer’s interaction with compliant-sensitive material can be managed. For example, in the case of pre-contract and contractual information the system can ensure the information was served, can ensure the information was seen and can capture the customer’s agreement that they have read and understood the information and agreed to the contractual terms. All these steps and the process by which they are undertaken, are enforced, recorded and re-playable.

Creditworthiness

The system can, in addition to lender’s traditional credit checks, offer enhanced Affordability checks:

• Unsecured Affordability Indicator - highlights individuals with an unsecured debt to income ratio of 20:1 or higher.
• Secured Affordability Indicator - highlights individuals with repayments on secured lending taking up to 80% or more of their income.
• Over-Indebtedness Score - predicts the probability of an individual becoming over-indebted then defaulting.
• The Affordability Check - on-line delivery system for the Unsecured Affordability Indicator. In addition, it will give an indication of salary accuracy, summary bureau and single customer view.

Customer Communication

All customer messaging (including non-acceptance notification) can be delivered on a customised, automated, real-time basis.

Clearly the CCD is another set of compliance requirements in what is a continually changing regulatory environment. The key is to use systems and services which are able to accommodate change. When reporting on the adaptability of the service, Hogan Lovells said “We understand that [Dealflo] enables lenders to modify their online signature processes on an ongoing basis. This will enable them to bring their systems into line with regulatory developments as they occur.”

How does Dealflo help companies with compliance and legal enforceability?