Unsuitable loans

The National Credit Code allows for a loan to be determined unsuitable on the basis that your client does not have the capacity to repay the loan without experiencing substantial hardship.

  • Obtain a copy of the credit assessment. The credit provider must provide this on request.
  • Apply to the credit provider to seek changes in the contract terms.
    If the credit provider does not agree to the change, they must provide: the name of the approved external dispute resolution (EDR) scheme of which they are a member; the person’s rights under that scheme; and their reasons for not agreeing to negotiate. You can then apply to the dispute resolution scheme or the court (ss. 72–78 National Credit Code).
  • A request can also be made to the credit provider to negotiate a postponement of enforcement proceedings (ss. 94–96 National Credit Code).
  • Put your client in touch with the relevant external dispute resolution (EDR) scheme (see below).

For clients who are having difficulty meeting loan repayments, see also FOS Fact Sheet Financial Difficulty ­– For consumers who may be experiencing financial difficulty.