At the close of its first month in charge, it’s clear the Financial Conduct Authority (FCA) has established itself as a ruthless protector of the consumer in the credit market. The FCA wields much greater power than its predecessor, the Office of Fair Trading, and has already set about enforcing a series of stricter rules on credit providers, vowing to take out those that fail to comply. 

For high-street lenders, the recent FCA ‘Mortgage Market Review’ could be the strongest indicator of what is to come. Changes will mean delving much deeper into the spending habits and lifestyles of want-to-be home buyers and those looking to re-mortgage.

Yet such an approach is not alien within the current lending market. Take Everyday Loans, for example, a sub-prime lender offering unsecured personal loans up to £10,000 for up to five years. Everyday Loans was established with the aim of helping borrowers understand their credit rating and develop basic financial skills, which would enable them to operate within their means and improve their financial situation. Thanks to this market positioning, Everyday Loans has prospered in the years of financial turbulence and its customers have been able to repay their loans. The business attributes a large part of its success to the technology it uses to facilitate the application process, which enables it to assess affordability and calculate an appropriate loan amount according to a set of predetermined criteria. 

As the FCA continues its industry-wide clamp down, ensuring that customers are granted loan products that are affordable is fast becoming a fundamental requirement. By integrating intelligent decisioning technologies, like those in place at Everyday Loans, lenders can observe the rules and regulations set out by the FCA and at the same time keep their operations efficient, cut costs and free up internal resources. 

Much like the FCA’s proposed mortgage interviews plan, these systems are designed to match customers with loan products that are suited to their financial circumstances and ensure that the computer only says ‘yes’ when all the ‘lending rules’ have been passed. 

These changes in the mortgage market are likely to be rolled out to the entire lending industry before long, so lenders should be taking steps today to make use of these technologies and demonstrate their commitment to responsible lending, ideally before the FCA comes knocking on their door.