The United Kingdom is considering new rules to make getting loans harder. After the Learning and Skills Council discovered that 9 out of 10 customers could not calculate basic financial numbers, ministers took note. .
Concern about lack of financial knowledge
As a response to the global financial crisis, the United Kingdom formed a Consumer Financial Education Body. The group found out that basic questions couldn’t be answered by about 74 percent of Britons who have mortgages. People could not even determine how a 1 percent rise in the bank rate would affect them. The basics of personal cash loan being unknown by so many makes a huge impact on the country.
A solution to test?
The UK is considering a test as one of their options. Customers getting a loan may just have to take a test first. The test would make sure consumers know basic features of the loan and financial products they’re using. Example questions might contain the rate of interest of the loan or the term of the loan. One choice that has been suggested to the test is a simple declaration the borrower has read and understood the terms of the loan.
Reviewing how loans are sold to consumers
The Treasury and Business departments of the government are co-running the review of loan practices in the United Kingdom. Lenders might have to reveal the amount of interest that could be paid over time with this. There might be a change in how bankruptcy works also helping people to “start over.”.
