The UPC code of conduct for responsible credit “Principles for contracting and granting mortgage and consumer loans in a responsible manner” is composed of ten principles which cover the entire credit cycle, from the first contact with the client to management of any late payment:
1. Credit transparency
How to provide correct and understandable information in product advertising and main customer-oriented processes?
- The product information is understandable, non-misleading and user-friendly for the borrower.
- The advertising messages are not unequivocal.
- The customer has access to easily accessible contact points if he has a request, regardless of the sales channel he
2. Correct pricing of credit
How to communicate on unequivocal prices?
- Give the borrower candidate a clear overview of all product costs (interest rates and costs).
- When applicable, communicate to the client the standard APR (annual effective annual rate), in order to allow him to compare different credit offers.
3. Customer service
How can you help borrowers stay in control of their credit needs and manage the risk of debt distress?
- Offer the client financial support by explaining to him the principles of budget management and warning him of the possible consequences of defaulting on a
- Help the client choose the solutions that best meet their needs.
- Inform the borrower of the risks of over-indebtedness linked to consumer credit or mortgage credit, on the basis of clear rules of conduct (brochures and websites).
- Entrust the following tasks to qualified personnel: the sale of credits, the conclusion of credit contracts and the management of late payments, and ensure, if necessary, that these personnel receive adequate training. The assimilation of this module by the target audience is an integral part of the qualification requirement which staff must meet.
How to protect the customer’s personal data and privacy?
- Customer data is treated confidentially within the framework of the law and the obligations it imposes (example: Central Credit Office for individuals and legal authorities).
- In accordance with the legislation relating to data protection, the customer can make use of his right to access and, if necessary, to the rectification of the data concerning him. He also has the right to object to the use of this data.
5. Customer satisfaction.
How to measure customer satisfaction and how to react immediately and effectively to customer complaints?
- The customer has access to all the information relating to the procedures for handling complaints and to the contact details enabling him to contact
- Record and respond to all customer complaints immediately.
- Check customer satisfaction at regular intervals .
6. Credit cycle management
How to define a credit policy and processes and ensure their implementation?
- Comply with a predefined credit policy that covers all aspects of the credit cycle: customer acceptance, analysis of the loan portfolio, risk prevention and recovery.
- From the information obtained from the candidate borrower and from other sources, verify, with respect for privacy and in accordance with data protection regulations, whether the income of the candidate borrower allows him to repay the credit concerned. Next, check whether this repayment capacity will continue in the near future despite its debt
7. Data collection
How to assess the creditworthiness of the client based on correct and precise information that it provides as well as on the basis of external sources?
- Define standards for client identification.
- Gather, both internally and externally, the precise and relevant information relating to the borrower, which the lender needs to assess its ability to meet its financial obligations.
- The lender has the right to control the accuracy and completeness of the information provided by the applicant
8. Credit risk assessment
How to estimate the risk represented by the client and assess the residual budget (“credit risk assessment”)?
- The credit risk assessment and loan portfolio analysis models are systematically based on:
- credit rules and / or valuation models,
- the available budget, calculated on the basis of the examination of the foreseeable income and expenditure of the client in order to determine to what extent he will be able to meet his financial obligations;
- precise and reliable estimates on the professional basis of the value of housing in the event of housing loans.
- Caution will be particularly advised in the case of products initially associated with a fixed rate and / or which have been the subject of subsequent interest increases, and in particular, in the case of interest rate loans.
9. Risk prevention
How to organize the monitoring of indebtedness and the use of credit so as to detect payment problems and anticipate late payments?
- Practice a structured approach in order to detect and limit the credit and fraud risk linked to contracts in progress.
- Immediately contact the customer who has not made a payment in order to know the reason and to seek appropriate solutions.
- In the event of unforeseen events or other significant changes in the borrower’s living conditions, examine requests for adaptation / modification of the repayment terms. In this case, the borrower will be informed of the financial repercussions and the legal implications of a possible modification of the credit conditions.
10. Supporting debts
How to actively propose solutions so that the client can optimize his possibilities of honoring his financial obligations?
- Any credit decision is based in particular on the calculation of the residual budget. This offers the borrower candidate a means of determining his borrowing capacity, taking into account in particular the amount of the loan, its duration and the repayment terms.
- Offer the borrower all the help that he is reasonably entitled to expect to facilitate the repayment of his credit.