Why Responsible Lending Matters
Thursday April 16th, 2020
A growing global trend over the past couple of decades has seen increasing numbers of people given straightforward access to ever-higher credit limits, along with more flexible lending agreements, year on year.
A more adaptable financing environment can have a multitude of obvious benefits to both UK customers and the businesses serving them. This applies whether you’re talking about short-term loans, extended zero interest managed payment plans, or any other form of personal or retail financing.
The catch, of course, is that these sorts of arrangements must be handled responsibly at both ends of the chain. It goes almost without saying that failure to do so can quickly land individuals and businesses – indeed, even entire economies – in serious trouble. The concept of responsible lending has therefore never been more important than it is today.
At Duologi, responsible lending forms a core part of our approach to any form of retail finance or flexible payment plan, regardless of the size of your business.
Responsible lending: a definition
Responsible lending is, in short, a process of due diligence. It’s about ensuring that the type and extent of any credit extended to an individual borrower is offered on manageable terms for them. This is a two-way street to some extent – however, the primary weight of responsibility tends to lie with the creditor, and rightly so.
From a retail financing standpoint, for example, this means that:
– Repayment rates and schedules must be confirmed as affordable and manageable for the customer prior to any offer being made
– The full terms of a given payment plan must be made absolutely transparent, and be clearly communicated, to all parties at all times
– There’s a coherent and structured support process in place should any difficulties arise for the customer further down the line
In its simplest definition, a responsible lending policy dictates that any offer of financial lending ultimately serves the best interests of the borrower.
Key measures to help promote responsible lending in the UK
In recent years, numerous parliamentary white papers, consumer directives and EU-wide studies have focussed intensively on promoting and upholding responsible lending practices across the UK consumer finance market. Key measures backed by most such reports include:
A better approach to credit scoring
– Simple interview-based credit checks, as were once the UK standard, have repeatedly proven themselves to be unreliable indicators
– They have since been replaced with more accurate credit scoring processes – now a prerequisite to the extension of credit offers – backed by improved approaches to data sharing across the consumer finance industry
More robust customer support
– The more widespread availability of free, high quality debt advice has been a key driver of UK responsible lending policies since the turn of the millennium
– This in turn has been reflected in an industry trend towards more transparent credit literature across the board
– Designing clearer, more robust guidelines, advice and information for prospective borrowers is now a standard practice among credible lenders
– This should always be provided and explained in full, far in advance of any formal credit arrangements being entered into
How does Duologi help to promote responsible lending?
– We’re a responsible, FCA-authorised business backed by Oaktree Capital, one of the largest investment management firms in the world
We insist on operating in a completely transparent way, putting robust customer service solutions at the heart of everything we do
– We spend time getting to know your business on an individual level, with a dedicated team of financial experts assigned to each and every client
We take pride in understanding precisely what sorts of customer finance arrangements will help drive you and your customers forward in manageable, sustainable, growable ways
– We handle all customer credit scoring processes on behalf of our client businesses, taking responsibility away from the point-of-sale providers
Our customer finance packages are designed such that sellers and providers still receive up-front payment in full for all goods and services, meaning cash flow into your business is unaffected
– The expert Duologi team is made up of money management specialists, tech wizards, digital marketing powerhouses and expert data analysts
All of our products and services combine cutting-edge technical expertise with decades of experience in the financial services sector
– We encourage our client businesses to obtain an FCA license, even when not strictly required by certain payment plans and packages (e.g. 0% interest free finance for 12 months)
– We avoid the risk associated with a ‘one size fits all’ approach, instead offering a full and flexible range of payment plans and financing services for businesses of all sizes
These include 0% interest free, interest bearing and zero deposit, as well as entirely custom/bespoke products tailored to your customers’ specific needs and circumstances. Due to concerns around responsible lending, particularly in light of the global coronavirus pandemic, we are no longer offering Buy Now Pay Later packages.
– We offer no-obligation demos of all our services and packages, enabling clients to see and understand exactly how they work before deciding on the solutions that will work best for them
Contact a member of our team to learn more about our responsible lending policies, to request a demo, or to find out more about launching a flexible and manageable retail finance package for your business today.