The United Kingdom is considering new rules to make getting loans harder. It is being considered because it was found by the Learning and Skills Council that 9 out of 10 customers could not even calculate basic formulas and numbers. Now, new regulations may require customers that need loans to take a test.
Concern that there is not financial knowledge
A Consumer Financial Education body was formed in the United Kingdom because of the global financial crisis. The group found out that basic questions couldn’t be answered by about 74 percent of Britons who have mortgages. For example, most did not know how a 1 percent rise in the bank rate would affect their loans, payday or bills. The entire country is impacted by this lack of knowledge about basics of personnel loans.
A possible solution?
A required test is a solution considered by the UK. A test can be taken by customers getting a loan. Basic features of the loan and financial products would be covered on the test. Example questions might include the rate of interest of the loan or the term of the loan. A declaration stating the borrower read and understood the terms of the loan is a suggestion given on how the test might be given.
Reviewing how loans are sold to consumers
The Treasury and Business departments of the government are co-running the review of loan practices within the United Kingdom. This review is also going to be considering new regulations that require lenders to reveal the full amount of interest the loan would accrue over time. There is also a possibility that bankruptcy regulations would be shifted, allowing those that are truly without the ability to pay to really “start over.”.
