There are unlikely to be many circumstances where a firm will be certain that a customer has mental capacity limitations which will prevent them from making a particular borrowing decision.
The firm will need to start with the presumption that all customers have the necessary capacity.
Customers with mental capacity limitations should not be unfairly discriminated against or inappropriately denied access to financial services. CONC expects firms involved in the sale of motor finance to devise practices and procedures that treat customers who may have a mental capacity limitation fairly and place them – so far as is possible – on an equal footing with those who do not have such a limitation. Firms will need to build additional protections into their sales processes to help mitigate the risks to vulnerable customers: this could include, for example, applying a higher level of scrutiny to the customer's credit application.
Firms' primary focus should be on:
- taking action to assess whether a customer can understand, remember and weigh-up infromation and explanations, and communicate a decision;
- assisting and providing reasonable support to help customers make a decision;
- providing customers with clear information and explanations about credit agreements and any associated risks of failing to maintain their repayments;
- giving customers adequate time to consider the information and explanations provided and ask any questions. Some mental capacity limitations can be temporary and may fluctuate over time – so giving customers the opportunity to take information away and giving them time to consider explanations may enable them to make informed decisions at a later date; and
- carrying out appropriately robust assessments of the customer's ability to afford to make repayments. Such assessments should not rely unduly on the information provided by the customer.
In 2017 the FLA and The UK Cards Association, in partnership with the University of Bristol, published Vulnerability: A guide for lending which provides practical guidance to help customer facing staff identify and assist vulnerable customers.