Content Options

View Options

Status: You are viewing the version of the handbook as on 2019-12-18.

BCOBS 8.3 Eligibility tool

Application

BCOBS 8.3.1R
  1. (1)

    12This section, apart from BCOBS 8.3.2R, applies to a firm in relation to a trading name if:

    1. (a)

      70,000 or more personal current accounts are held with the firm under that trading name; and

    2. (b)

      the firm offers personal current accounts other than excluded accounts under that trading name.

  2. (2)

    BCOBS 8.3.2R applies to a firm that this chapter applies to: see BCOBS 8.1.4R, BCOBS 8.1.5G and BCOBS 8.1.6G.

BCOBS 8.3.2R

12A firm must not publish a tool that purports to perform the function of an eligibility tool as described in BCOBS 8.3.3R(1) unless the firm complies with the rules in this section as though the firm were a firm to which this section (apart from this rule) applied in respect of that tool.

Publishing an eligibility tool for arranged overdrafts

BCOBS 8.3.3R
  1. (1)

    12A firm must make available a tool that enables a potential banking customer to obtain an indication tailored to the individual circumstances of that banking customer of the likelihood that the firm would offer an arranged overdraft of a particular amount to that banking customer if the banking customer opened a personal current account with the firm (“the eligibility tool”):

    1. (a)

      for each trading name to which this section applies; and

    2. (b)

      beginning on the day one year after the first time 70,000 or more personal current accounts are held with the firm under that trading name.

  2. (2)

    A firm must make the eligibility tool available continuously and in an easily accessible location on the website for each trading name in respect of which this section applies except in the circumstances provided for in (3).

  3. (3)

    A firm that offers personal current account opening services exclusively through a mobile telephone application may instead make the eligibility tool required under this rule available through that mobile telephone application, but must refer prominently on its website to the availability of the tool through that application.

  4. (4)

    A firm should choose how and where to make the eligibility tool available so as to be consistent with how the firm ordinarily communicates with its customers and select a method most likely to come to the attention of its customers and potential customers.

  5. (5)

    The eligibility calculator or the reference to it must be published on the firm’s website alongside the information required to be published under BCOBS 4.4.12R.

  6. (6)

    A firm must either:

    1. (a)

      present the eligibility tool together with the cost calculator required under BCOBS 8.2; or

    2. (b)

      include in close proximity to the eligibility tool a prominent indication of the existence of the cost calculator required under BCOBS 8.2 and a link enabling a banking customer to access that cost calculator.

BCOBS 8.3.4R

12The eligibility tool must be accompanied by a prominent statement that:

  1. (1)

    the output of the eligibility tool is dependent on the accuracy of the information input by the banking customer;

  2. (2)

    the output of the eligibility tool is indicative only and does not guarantee that the banking customer will be offered an arranged overdraft of the amount selected or at all;

  3. (3)

    any overdraft offered by the firm will depend upon a full eligibility assessment that may affect whether the banking customer is able to obtain an arranged overdraft and of what amount; and

  4. (4)

    use of the eligibility tool will not adversely affect the banking customer’s credit file.

Inputs to the eligibility tool

BCOBS 8.3.5R
  1. (1)

    12The eligibility tool must allow the banking customer to input or select the level of arranged overdraft that the banking customer wants to obtain an indication of likelihood of eligibility for.

  2. (2)

    The eligibility tool may require the banking customer to:

    1. (a)

      input such personal details as the firm specifies; and

    2. (b)

      consent to the firm conducting a credit reference agency search in respect of the banking customer of a kind that will not leave evidence of an application on the banking customer’s credit file.

  3. (3)

    The eligibility tool must enable a banking customer to assess eligibility for different overdraft amounts on the same occasion without re-entering other information.

  4. (4)

    The eligibility tool may limit the amount that can be entered under (1). Any limit imposed by the tool must be no lower than:

    1. (a)

      £5,000; or

    2. (b)

      (if lower) the largest credit limit that the firm is willing to offer to any banking customer by way of arranged overdraft associated with a personal current account.

BCOBS 8.3.6G
  1. (1)

    12A firm is not required to provide a continuous range of inputs for the level of arranged overdraft that the banking customer wants to obtain an indication of likelihood of eligibility for. If a firm chooses not to provide a continuous range of inputs it should ensure that it makes available sufficiently granular options that are representative of the levels of arranged overdraft that it offers in practice.

  2. (2)

    A firm that chooses to limit the amount that can be entered under BCOBS 8.3.5R(1) should make clear to banking customers whether that amount represents the maximum overdraft they may be eligible for and, if not, whether and how the banking customer can find out about their eligibility for a greater overdraft amount.

BCOBS 8.3.7R

12A firm must not, without the banking customer’s consent, use the information input into the eligibility tool by the banking customer for any purpose other than:

  1. (1)

    generating the output of the eligibility calculator;

  2. (2)

    monitoring the accuracy of the eligibility calculator; or

  3. (3)

    monitoring, preventing and detecting financial crime.

Outputs of the eligibility tool

BCOBS 8.3.8R

12The output of the eligibility tool must be provided promptly and must:

  1. (1)

    represent a reasonable estimate by the firm of the probability that it would offer the banking customer an overdraft of the amount selected if the banking customer were to apply for it; and

  2. (2)

    be communicated in a clear, fair and not misleading way.

BCOBS 8.3.9G
  1. (1)

    12A firm may choose how to present the output of the eligibility tool, provided the format chosen is fair, clear and not misleading. For example, the output may be given as a percentage, a qualitative description or graphical representation.

  2. (2)

    The output should adequately represent the range of likelihood of approval. In particular any graphical representation suggesting a spectrum of likelihood of approval, such as a dial or an indicator along a bar, should represent the full range of likelihoods of approval ranging from certain refusal to certain acceptance, even if in practice no banking customer will fall at either extreme of the scale.

  3. (3)

    The probability of a banking customer being offered an overdraft should be assessed having regard to the proportion of banking customers who are similar to the banking customer by reference to the factors assessed by the eligibility tool whom the firm reasonably expects would be offered an arranged overdraft of the amount selected.

Design and monitoring of the eligibility tool

BCOBS 8.3.10R
  1. (1)

    12A firm must have regard to its process for approving an overdraft for a banking customer when selecting the factors considered and process used by the eligibility tool to produce its output, but it is not required to duplicate that process.

  2. (2)

    A firm’s eligibility tool must use only factors that:

    1. (a)

      could have a significant impact on:

      1. (i)

        the likelihood of the firm approving a banking customer for an arranged overdraft; or

      2. (ii)

        the amount of arranged overdraft approved;

    2. (b)

      can be assessed in an automatic manner; and

    3. (c)

      can be assessed based on information that:

      1. (i)

        is readily available to the banking customer and proportionate to require prior to a full application being made;

      2. (ii)

        is readily available to the firm; or

      3. (iii)

        the firm can readily obtain by conducting a credit reference agency search in respect of the banking customer of a kind that does not leave evidence of an application on the banking customer’s credit file.

  3. (3)

    A firm should select the information it requires a banking customer to provide when using the eligibility tool, and the factors considered and process used by the eligibility tool to produce its output so as to achieve a proportionate balance between:

    1. (a)

      the accuracy of the output of the tool; and

    2. (b)

      the amount of information a banking customer is required to input.

  4. (4)

    A firm is not required to verify the accuracy of any information input by the banking customer into the eligibility tool.

BCOBS 8.3.11G
  1. (1)

    12A firm should approach the task of designing the eligibility tool in a proportionate, balanced and practical way so as to maximise the eligibility tool’s utility to the banking customers who use it. A firm is not required to analyse every possible factor to produce the output of the eligibility tool.

  2. (2)

    A firm should only seek information from the banking customer or a credit reference agency where this is likely to have a significant impact on the likelihood of the banking customer being offered an arranged overdraft or on the amount of arranged overdraft offered to the banking customer.

  3. (3)

    A firm should have regard to the fact that the banking customer may be using the eligibility tool to compare a number of providers and should avoid, where practical, requesting detailed information to an extent that is likely to discourage a banking customer from using the eligibility tool. A firm should consider whether less comprehensive information would be more appropriate for the purposes of the eligibility tool. For example, a banking customer is likely to be able to readily confirm their employment status or total income, but requiring a detailed breakdown of income and expenditure is likely to be disproportionate.

BCOBS 8.3.12R
  1. (1)

    12A firm must establish a process for monitoring the accuracy of the output of the eligibility tool.

  2. (2)

    A firm must review the factors considered and process used by the eligibility tool to produce its output whenever:

    1. (a)

      there is a material change to the firm’s policies or processes for approving an overdraft; or

    2. (b)

      the firm’s monitoring of the eligibility tool reveals that the eligibility tool’s outputs deviate to a significant degree from those expected.

BCOBS 8.3.13G

12Examples of processes a firm could use to comply with BCOBS 8.3.12R(1) include:

  1. (1)

    periodically comparing the outcomes of samples of actual overdraft decisions with the outputs the tool would have generated for those banking customers; and

  2. (2)

    periodically sampling banking customers who used the tool and subsequently applied for a personal current account to assess whether approval decisions correspond to those expected if the tool was accurate.