• Guideline 1: Verification of the consumer’s income
1.1.: The EBA’s Guidelines must not have the effect of requiring that the lender make future projections, given that the borrower’s creditworthiness must be assessed at the time the loan is to be granted and only at that time, in order to inform the final decision on whether or not to grant the loan.
The EBA makes reference to the borrower’s income history. The FBF considers that this notion of “income history” must be left to the judgement of the bank, which, based on the borrower’s profile and its relations with him, is alone able to determine how much depth is required to assess this “history”. In any case, a distinction must be made between prospects on the one hand and borrowers who are already bank clients.
The EBA also makes reference to a shift in consumer income over time. With regard to this, it is imperative to review the context of Article 18.6 de MCD, which requires a reassessment of a consumer’s creditworthiness only prior to a significant increase in the total amount of credit.
Lastly, this Guideline does not reflect the fact that changes in the consumer’s expenses and family situation have a huge influence on creditworthiness and that these are factors that the lender, by definition, cannot have in its possession at the time of the loan.
1.2. and 1.3.: the FBF is concerned about the introduction of notions aimed at guaranteeing the quality of the information provided by the consumer, specifically the independence of sources (1.2) and third party verification (1.3). For example, would the receipt of a pay slip or a tax declaration from the consumer fulfil the third party verification requirement? Or is the intention that a creditor consults a candidate borrower’s employer or the tax authority? This would be an unjustified burdensome requirement. We understand that is not the aim of the guidelines. Therefore, points 1.2 and 1.3 should be rewritten in order to clearly provide that the consumer should provide the lender with justificatory documentation from third party, such as pay slip or tax assessment, which could prove his statements on his income.
• Guideline 2: Documentation and retention of information
This Guideline must state that it applies under rules on personal data protection and that, when national legislation provides for the maximum times that some information may be kept on file, the lender must not violate such legislation.
• Guideline 3: Identification and prevention of misrepresented information
Despite this Guideline’s good intentions, we feel it is too subjective and, hence, almost impossible to implement and integrate into bank procedures. We ask that it be deleted.
• Guideline 4: Assessment of the consumer’s ability to meet his/her obligations under the credit agreement
4.1.: This Guideline introduces a presumption of responsibility on the lender’s part in the event of borrower default, by suggesting that the lender took part in the borrower’s over-indebtedness. However MCD states only that the lender should assess the borrower’s creditworthiness in order to “determine the probability that the consumer will be able to meet its obligations under terms of the loan agreement”. So it is not up to the lender to predict with certainty whether or not the borrower can repay his loan in full.
The following phrase should therefore be deleted: “without causing the consumer undue hardship and over-indebtedness”.
4.3.: This Guideline does not reflect the fact that many factors may cause over-indebtedness, in particular life events, which are the true triggers of over-indebtedness, and not loans taken out by the consumer. It also neglects Article 21 of the Mortgage Credit Directive of 4 February 2014, which requires that Member State ensure that all lenders have access to the loan database used in that Member State to assess consumer creditworthiness.
4.4.: This point deals with a future situation that is impossible to predict accurately in advance (strictly speaking, there is no longer a “normal retirement age”, but an aggregate of different and personal cases). Above all, this is already provided in Guideline 6; this paragraph should therefore be deleted as it could be redundant.
• Guidelines 5 & 6: Allowance for the consumer’s committed and other non-discretionary expenditures and Allowance for potential future negative scenarios
These Guidelines go well beyond the MCD directive, which requires only that the lender, based on the information in its possession (most of which is provided by the consumer), assess the probability that the consumer will repay his loan properly. It does not require the lender to involve itself in the customer’s private affairs for the purpose of predicting his future.
• Guideline 7: Identification of groups of loans with higher risk profiles