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On 1 December 2021, major changes to the Credit Contract and Consumer Finance Act 2003 (CCCFA) came into force.

The changes introduced a raft of new requirements for lenders, which has resulted in a significantly longer and more complex application process for potential borrowers.

These changes apply to all applications for consumer credit, including home loans, personal loans, credit cards and vehicle finance.

One of the most significant changes are the new suitability regulations. In essence, the suitability regulations require lenders to take a ‘deep dive’ into the potential borrowers’ finances. Bank accounts will be meticulously scrutinised for income and expenditure over the last 90 days to assess the applicant’s ability to meet the loan repayments. Expenditure is assessed to the minutest detail, such as takeaways and grocery shops.

With these added burdens on lenders, borrowers can expect significant delays in obtaining finance and refusals where acceptance would have once been likely if their bank accounts for the last 90 days are not ‘squeaky clean’.

In the current lending climate, it is important for potential borrowers to be proactive about cleaning up their bank accounts before applying, expect applications to take much longer than usual, and engage a mortgage broker to help navigate the information and explanations lenders now require.