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My optimism is largely down to one fact: The automated back-office systems that can now be employed are light years ahead of what was availa- ble to payday lenders when the claims chasing snowball began to gather momentum. "There can’t be many who are still unaware of how they ensure rapid, optimal outcomes for both the lender and the borrower" We all know how assisted decisioning APIs - the Open Banking based plat- forms that automate much of a lender’s underwriting process - have improved the loan application process. There can’t be many who are still unaware of how they ensure rapid, optimal out- comes for both the lender and the bor- rower. Platforms such as LendingMet- rics’ Auto Decision Platform (ADP) have been quietly working in the back- ground for some time now, ensuring affordability criteria is always met and running checks that lead to the right decision from both the consumers’ and lenders’ perspectives. There will not be as many though who know that the technology has a welcome extra benefit; it means lenders no longer have to rely on patchy due dil- igence documentation - often amount- ing only to a disparate mix of paper proofs - when trying to defend mis-sell- ing claims. They now have a robust decision-mak- ing process, not susceptible to human error, that generates a digital audit trail able to stand up to the most intense scrutiny; much like that of the payday lenders. All of the data elements that go towards making every decision are stored and an audit kept of how they are used. So, unlike their payday counterparts, BNPL lenders can have a lending policy

in place that is signed off by their com- pliance team and diligently enforced by technology. Their decision making can be 100% consistent and backed-up by a digital footprint. Going forward, if a mis-selling claim is made, a lender has a watertight justi- fication for its decision to present to a regulator. Something that most payday lenders could only dream of having. BNPL operators will therefore largely be able to weather any storm that new reg- ulations and claims chasers generate. They will have the capability to handle mis-selling cases in a much more cost-effective and impressive manner than payday lenders. Instead of the time-consuming task of manually col- lating documentation to support their case, all they need do is retrieve the digital record at the press of a button. Those cases that are filed with the Ombudsman will no doubt still involve a costly admin fee that has to be paid for by the lender, but this time the cases will be much more difficult to prove. And this alone will steer claims chasers away from lenders that have invested in a digital back-office.

Claims chasing companies have a known ruthlessness for setting their sights on those lenders that they think are easier targets. If there are to be any casualties of the regulatory changes in hand, it will be those lenders that fail to update their back-offices over the next 12 months. But those with the right decisioning technology in place can rest easy. Should the need arise, they will have the equivalent of a silver bullet to present to a regulator or claims chaser.”

Above: LendingMetrics' Commercial Director David Wylie

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