The major idea behind this concept is that lenders should not act solely in their own interests, but that they should also take into account the consumer borrowersвЂ™ interests and needs throughout the relationship in order to prevent consumer detriment (cf while the modalities of responsible lending may differ across different legal systems and segments of the consumer credit markets. Ramsay 2012). Operationalizing the concept of вЂњresponsible lendingвЂќ within the context that is legal of credit transactions involves the have to convert it into particular duties of loan providers towards customers. Such duties typically exceed the creditorsвЂ™ and credit intermediariesвЂ™ duties to share with the customers in regards to the traits of a credit item and consist of more intrusive responsibilities aimed at avoiding the summary of credit agreements that could end in customer detriment. In this context, a difference between your credit rating item design and lending methods into the circulation procedure becomes specially relevant.
In specific, these guidelines are created to avoid finance institutions manufacturing financial products which may damage customers
An important prerequisite for responsible lending in the consumer credit markets is that consumer credit products are designed in a responsible way вЂ“ that is, in the best interests of consumers to whom they are marketed in our view. Footnote 10 the significance of economic item design from a customer security viewpoint is increasingly recognized into the post-crisis age that has witnessed the development of the product that is so-called regimes across different aspects of economic services (Cherednychenko 2014). To your level that such rules use in neuro-scientific credit rating, they could profoundly influence the design that is contractual of credit items, precluding the development of вЂњtoxicвЂќ credit products that are very very likely to cause customer detriment. Read more