Affordability rules make it easier for Loans Officers to assess any income and spending risks within the transaction data provided by an Open Banking connection.
Rules can be applied once the initial Open Banking connection established. The rules are applied for any subsequent connection. In other words, if additional Open Banking connections are requested to cover missing accounts, the rules will re-evaluate using the full set of open banking data as soon as the additional account(s) are connected.
The rules
These rules allow for a detailed assessment of applicants' financial behaviour through open banking data, enabling more informed and tailored decision-making for affordability and risk management. Each rule is designed to flag specific financial patterns that may indicate potential risks:
Income verification (REF24) compares the applicant's declared income to the average income over the Open Banking connection period. There's a REFER decision if there’s a significant (configurable) discrepancy.
Note: The average income is calculated by dividing the total income by the number of months in the open banking period, so it will vary depending on how many months of data are shared.
Income stability (REF25) checks for income consistency by comparing the applicant's declared income with their most recent month's income. There's a REFER decision if there’s a significant (configurable) discrepancy.
Bounced payments (DEC15) monitors bounced payments (Direct Debits and Standing Orders). A DECLINE decision is returned a set number of bounced payments are detected within a configurable time-frame.
Gambling frequency (DEC16) identifies gambling activity. A DECLINE decision is returned if the applicant exceeds a certain number of gambling transactions in a configurable period.
Gambling value (DEC17) assesses gambling spending as a proportion of income, issuing a DECLINE decision if the applicant’s gambling expenses exceed a set percentage of their income within a configurable period.f
Buy Now Pay Later (DEC18) flags frequent Buy Now, Pay Later (BNPL) transactions, providing a DECLINE decision if a set number of transactions occurs within a configurable time-frame.
Together, these rules provide a flexible, data-driven approach to assess applicants' financial stability and spending habits, supporting more accurate and responsible lending decisions.
Standard rule settings
All rules are standardised, but these settings are configurable.
Refer Rules
REF24 - issues a REFER decision if the average income is at least 10% lower than the applicant's declared income. This percentage threshold is configurable, allowing for adjustments (e.g. 5%, 30% etc) to meet your specific requirements.
REF25 - issues a REFER decision if the most recent month's income is at least 10% lower than the applicant's declared income. This percentage threshold is configurable, allowing for adjustments (e.g. 5%, 30% etc) to meet your specific requirements.
Decline Rules
DEC15 - issues a DECLINE decision if the applicant's open banking data shows 2 or more bounced payments within the past 2 months. Both the number of payments and the number of months (e.g. 3 payments within 1 month, 5 payments within 3 months etc) are configurable to meet specific risk requirements.
DEC16 - issues a DECLINE decision if the applicant's open banking data shows 10 or more gambling transactions within the past month. Both the number of transactions and the number of months (e.g. 15 transactions within 2 months, 30 transactions within 3 months etc) are configurable to meet specific risk requirements.
DEC17 - issues a DECLINE decision if the applicant's open banking data shows gambling spending totalling 10% or more of their income within the past month. Both the spending threshold and the number of months (e.g. 5% over 2 months, 30% over 3 months) are configurable to meet specific risk requirements.
DEC18 - issues a DECLINE decision if the applicant's open banking data shows 5 or more Buy Now, Pay Later (BNPL) transactions within the past 2 months. Both the number of transactions and the number of months (e.g. 3 transactions within 1 month, 10 transactions within 5 months) are configurable to meet specific risk requirements.