7.1 Responsible Financing

7.1.1 Introduction

Financing must be provided in a responsible manner to protect Consumers, prevent over-indebtedness and support economic stability. Licensed Financial Institutions must fully apply this Regulation to each and all parts of the Licensed Financial Institutions’ Credit granting process and ongoing management.

7.1.2 Description

1. 7.1.2.1 Licensed Financial Institutions must ensure they have obtained credible and independent information regarding the financial situation of the Consumer requesting financing.
    
2. 7.1.2.2 Licensed Financial Institutions must assess the related financial obligations, dependencies, capabilities and needs of their Consumers before agreeing to provide them with a financing product, Advice or service.
    
3. 7.1.2.3 Licensed Financial Institutions must ensure at the time of granting of Credit, the Credit does not cause over-indebtedness and/or undue financial burden on the Consumer.
    
4. 7.1.2.4 Licensed Financial Institutions must not charge unreasonable fees.
    
5. 7.1.2.5 Licensed Financial Institutions must not provide excessive Credit beyond amounts of Credit that the Consumer requires and / or that is reasonable, affordable and suitable for the Consumer’s needs.
    
6. 7.1.2.6 Licensed Financial Institutions must apply proper criteria in the method for carrying out due diligence and stress testing for the affordability and suitability of a Credit product for the Borrower / Financee. A copy of the testing results must be provided to the Consumer in writing for free.
    
7. 7.1.2.7 Licensed Financial Institutions must not grant or extend any form of Credit without expressed and documented consent by the Consumer.
    
8. 7.1.2.8 Licensed Financial Institutions must adopt a remuneration program for the staff that does not incentivize aggressive and inappropriate levels of Credit granting.
    
9. 7.1.2.9 Licensed Financial Institutions must monitor for inappropriate activities by Credit granting and sales representatives. The monitoring, at minimum, includes monitoring of monthly trend analysis of Credit granted and relevant Consumer Complaints.
    
10. 7.1.2.10 Licensed Financial Institutions must investigate and, where required, take corrective actions on anomalies and inappropriate activities in Credit granting. Such actions must be documented for review by Central Bank.
     
11. 7.1.2.11 Licensed Financial Institutions must ensure that Consumer Credit information provided to external bodies, including the Credit Information Agency is accurate and filed in a timely manner. Where a Licensed Financial Institution is made aware of any Errors in the Consumer information, the Licensed Financial Institution must take corrective measures in a timely manner.