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Are risk leaders struggling to identify vulnerable customers?


Struggling

Only 67% of risk leaders are carrying out affordability assessments, new research has claimed.

The study of 100 risk and customer experience managers from Callcredit Information Group revealed that although best practice was far from ubiquitous, a further 27% were planning to introduce these checks within the next 12 months.

The lack of existing checks comes despite 72% of risk leaders believing that they have a social responsibility to prevent customers from over-stretching themselves financially.

Eamonn Tierney, managing director for UK business development at Callcredit Information Group, said: “Our research shows that UK organisations are paying more attention to how they assess consumer credit affordability.

“But, with current levels of affordability checks varying per organisation, more should be done to ensure it becomes standard practice.

“Without a complete view of a customer, organisations can’t have full confidence in the lending decisions they are making.”

At present, just 40% of risk leaders rate themselves as very effective at identifying customers who are financially vulnerable.

Lack of senior management and board buy-in were identified as the main challenge to improving affordability checks.

Brexit and budget or cost implications were also considered to be potential obstacles.

Eamonn added: “The future of affordability is about verifying whether a credit applicant can afford new credit via a thorough evaluation of their income, outstanding debts, cost of living and general expenditure to understand how this new debt relates to their disposable income.

“Getting this right will not only help meet regulatory requirements, but also reduce over indebtedness, drive business growth and crucially protect consumers from financially overstretching themselves.”





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