Statement of Responsible Lending
This Credit Union aims to promote responsible lending and borrowing. By this, we mean that we put members’ interests first (both savers and borrowers). We check that loan products are appropriate and affordable, and also encourage and reward saving for all. Our policy and processes are transparent,as evidenced by information available online and/or by request on paper. If borrowers get into financial difficulties,
we work with them flexibly to support them. A key part of our responsible lending mission is also to ensure we remain financially sustainable and conform to all legal and regulatory requirements.
Our commitment to responsible lending applies to our operations and processes as follows:
1. Loan products
We offer loan products that are appropriate to current and potential members. This is not just a matter of the interest charged but also the length of the loan and other aspects of the loan including: any associated fees and charges; any security required for the loan; the purpose of the loan; the size of repayments, etc.
2. Savings and dividend
We promote and reward savings alongside lending and recognise that this often a key reason why people join the Credit Union. The shared dividend is promoted as a benefit for people to join as the money stays within the local community. We promote Saving As you Borrow (SAYB) practices as it has been shown that building small, regular savings helps build a buffer against financial shocks and makes saving easy.
Our product terms and conditions, and the loan application process, are clear and transparent for new and existing members. We write our product terms and conditions in plain English and follow our Tone of Voice Guide for all communications. We also set certain standards and expectations in terms of explaining key features to members before the loan is approved.
4. Over- Indebtedness
We ensure that borrowers can repay and do not become over-indebted. This is a key way of making sure that the loan is affordable (i.e. through assessing disposable income). We may also assess risk through credit checks, and expenditure checks. We may do this even if members have been with us for some time, as their financial situation may have changed.
Affordability checks may mean that we may offer a smaller loan than the one sought where there are over-indebtedness concerns. This means that we will also turn down some loan applications and we appreciate that this can be very difficult for people. If we do refuse applications, we will explain why and identify where our members can go for free, independent money advice or how they could view their credit file and check its accuracy.
5. Flexibility and support
We will encourage any members who are experiencing financial difficulties to notify us as soon as possible. We will recognise that they may need flexibility to repay. For example, it may be necessary to reschedule the loan to ensure that payments are affordable. We will review a loan with borrowers on a regular basis. This helps to foster a good relationship and trust between borrower/lender if repayment issues arise.
We are willing to direct members to free, independent financial or debt advice for members facing financial difficulty.