A review by the Financial Conduct Authority (FCA) found that lenders’ online and app-based loan applications can help borrowers understand what they are signing up for, but there is room for improvement.
The FCA said changes are needed to make sure people have all the information to make informed decisions about their finances.
The review is part of the FCA’s ongoing work to help people manage their money.
It shared examples of good and poor practice with lenders.
Some lenders used shorter, simpler language and explainer videos, which supported customer understanding.
However, the FCA found that some digital loan processes did not include enough ‘positive friction’ to slow decision-making.
It also found that important information, like costs, was excluded.
Alison Walters, director of consumer finance at the FCA, said: “Online and app-based applications can make it easier for people to get the credit they need to navigate their financial lives.
“But poorly designed applications could mean people bypass important information.
“We’re sharing examples of what works and what doesn’t, so lenders can better support their customers.”
