“NEO Finance”, AB
RULES ON ASSESSMENT OF CREDITWORTHINESS OF CONSUMER CREDIT BORROWERS
1. GENERAL PROVISIONS
1.1. Rules on assessment of creditworthiness of consumer credit borrowers set out by “NEO Finance”, AB, (hereinafter - the Rules) regulate the actions of employees of “NEO Finance”, AB, (hereinafter - the Company) on behalf of the Company conducting an assessment of creditworthiness of a Client to determine whether a particular client can be given a consumer credit, as well as determining the conditions under which the consumer credit may be granted to the particular client.
1.2. These Rules have been developed and construed in accordance with the Republic of Lithuania Law on Consumer Credit (Valstybės žinios (Official Gazette), No 1-1, 2011), Regulations for the Assessment of Consumer Credit Borrowers’ Solvency and Responsible Lending approved by the Resolution No 03-62 of the Bank of Lithuania of 19 March 2013 (version of the Resolution No 03-12 of the Board of the Bank of Lithuania of 28 January 2016) (hereinafter - the Regulations), Guidelines for Granting the Consumer Credit approved by the Decision No 241-69 of the Director of the Supervisory Authority of the Bank of Lithuania of 27 April 2015, the other legal acts valid in the Republic of Lithuania and documents governing working arrangements for the Company.
1.3. Issues on the assessment of creditworthiness of the Client which are not covered by these Rules are set directly on the basis of legal acts specified in the Paragraph 1.2 of these Rules.
1.4. In these Rules, definitions used in singular form shall also refer to definitions in plural form and vice versa if there is a need based on the actual situation
2. DEFINITIONS AND ABBREVIATIONS
2.1. The Company means „NEO Finance“, AB, a Joint stock company set up according to the laws of the Republic of Lithuania, whose registered office is at A. Vivulskio 7, Vilnius, Republic of Lithuania, legal entity code 303225546, company data is collected and stored in the Register of Legal Entities of State Enterprise Centre of Registers. The company is listed on the public list of consumer credit lenders administered by the Bank of Lithuania and on the public list of P2P platform operators administered by the Bank of Lithuania.
2.2. A lender is a natural person who is actually granting a consumer credit by intermediating for the Company as a P2P platform operator as defined in the Law on Consumer Credit.
2.3. A private consumption credit is granted after the assessment of only the personal income received by the Client and his commitments. Only half of the personal income received by the Client is used for the assessment. The Client is responsible personally for commitments arising from the personal consumer credit.
2.4. A payment is the periodic monthly payment which the consumer credit borrower is required to pay under the concluded consumer credit agreement. The payment consists of the repaid part of the consumer credit and of fees payable for the use of consumer credit under the particular consumer credit agreement. The fee is determined assuming that the consumer credit borrower will properly and in time implement their commitments under the consumer credit agreement and does not include the amount of actually potentially applicable penalty and compensatory interests.
2.5. The commitments are the amount of a monthly payment of financial commitments of the Client and his family to financial institutions and other persons. In the case of the personal consumer credit, commitments of the Client are the amount of a payment of only the personal financial commitments of the Client to financial institutions and other persons. The amount of the payment is calculated analogically to the Payment.
2.6. Proofs is the information confirmed by documents that makes it possible to draw conclusions about the real financial condition of the Client, including, but not limited to: bank statements of the Client, information about the workplace, the received salary and length of service provided in State Social Insurance Fund's (SODRA) database, information about existing agreements of the Client with other financial institutions provided in "Creditinfo Lithuania” or another database, the annual income tax returns provided by the Client to the State Tax Inspectorate and other available proofs.
2.7. The Client is a natural person, who has submitted an application in the platform for a consumer credit. The Client is a potential borrower of the Consumer Credit.
2.8. A negative ratio is a situation where a monthly amount of commitments of the client and his family is equal to or greater than 40 percent of the sustainable monthly income received by the Client and his family. In the case of the personal consumer credit, the negative ratio is calculated in the same manner, but only a monthly amount of sustainable monthly income personally received by a Client and the amount of collective commitments of his family specified by the Client is used.
2.9. The platform is an Internet platform managed by the company, available at www.paskoluklubas.lt where clients and other persons who use services of the Company carry out actions to obtain and grant consumer credits using services of the P2P platform operator.
2.10. The conditions are the amount of the particular consumer credit, repayment date, the Payment and other special conditions of the consumer credit agreement which define qualitatively financial commitments of the Consumer Credit Borrower under the Consumer Credit Agreement.
2.11. The family is the married persons (spouses).
2.12. A positive ratio is a situation where the monthly amount of commitments of the client and his family is less than 40 percent of the sustainable monthly income received by the Client and his family. In the case of the personal consumer credit, the positive ratio is calculated in the same manner, but only the amount of the sustainable monthly income received personally by a Client and the amount of the collective commitments of his family specified by a Client.
2.13. The P2P lending platform operator - peer to peer lending platform operator, as defined in the Law on Consumer Credit. In the case of these Rules, a P2P lending platform operator means a company acting as a P2P lending platform operator.
2.14. The sustainable income is the income of the consumer credit borrower that can reasonably be expected for the period of granting the consumer credit. A conclusion on the sustainable income of the Client is drawn by taking into account an average of the sustainable income received in at least the four months by the Client and it is assessed, whether the sustainable income received during the repayment period of the consumer credit specified in the agreement will be sufficient to implement all the commitments to financial institutions.
2.14.1. The sustainable income received from wages in the four months (work experience) are considered when:
2.14.1.2. changing the workplace in the last four months, if all the following circumstances are present;
2.14.1.2.1. a workplace is changed without a break or a break of no more than one working day may be based on objective evidence;
2.14.1.2.2. a new employment agreement has no trial period or when a new employment agreement has the trial period, the employment relationship continues beyond the end of the trial period.
2.14.2. Sustainable income in the four months are also considered in the case when during this period, a client had gone unpaid leave unless the client has been unpaid leave in the last month of the period which is assessed.
2.15. The amount of the sustainable monthly income is to be calculated as a simple average by dividing a total amount of the income received during the months which are assessed from the number of months which are assessed.
2.15.1. In the case, when the client has changed a workplace during the period which is assessed, the amount of the sustainable monthly income is calculated in the following order:
2.15.1.1. When the income from a new job increased, the income is calculated as a simple average taking into account the last four months;
2.15.1.2. When the income from a new job decreased, the income is calculated using the average of the lower income received from a new job.
2.16. A consumer credit is considered as defined by the Law on Consumer Credit
2.17. Law on Consumer Credit is the Republic of Lithuania Law on Consumer Credit.
2.18. A Consumer credit borrower is a natural person who has submitted an application in the platform for a consumer credit and concluded a consumer credit agreement.
2.19. NASIS is an information system, where a list of persons for whom applications are set up to prevent them from consumer credit agreements provided. A manager and administrator of the Information System as well as a manager and administrator of personal data of the Information System is the Bank of Lithuania.
2.20. PR is a population register. The administrator of the register is the State Enterprise Centre of Registers (hereinafter – the Centre of Registers), which is also an administrator of a personal data.
3. CONTENTS OF THE RESPONSIBLE LENDING PRINCIPLE
3.1. An employee of the Company assessing the creditworthiness of the Client shall follow the principle of the responsible lending. It is considered that the principle of the responsible lending is followed properly, if all the following aspects are implemented:
3.1.1. Each time before deciding to grant a consumer credit to a client the employee of the Company shall assess the creditworthiness of the Client on the basis of sufficient information as well as check the Client in PR and NASIS register;
3.1.2. The objective of the assessment of creditworthiness of the client is to assess the ability of the Client to assume a specific financial commitment, which together with the already existing financial commitments the Client would be able to implement;
3.1.3. The employee of the Company shall assess all the objectively implied relevant factors, taking into account the information provided by the Client and available to the Company, which may affect the creditworthiness of the Client, especially such as the sustainable income of the Client, his credit history, a potential of the income change (increase and decrease);
3.1.4. The lending shall be based (considering the historic data and cyclic nature of economy) on the debt-to-income ratio limit of all commitments of the Client under the consumer credit and other agreements with financial institutions;
3.1.5. The assessment of creditworthiness of the Client based on currently available information, shall be based on the assumption that the Client will be able to implement his financial commitments during the whole period of the consumer credit agreement;
3.1.6. If, when assessing the creditworthiness of the Client, it is determined that on the basis of the information available the Client is unable to implement financial commitments during the whole period of the consumer credit agreement, the consumer credit should not be granted to the Client.
4. INFORMATION COLLECTED DURING THE ASSESSMENT OF CREDITWORTHINESS
4.1. When assessing the creditworthiness of the client, the information collected compulsorily from him is indicated below:
4.1.1. After having selected a personal consumer credit, the personal average of the sustainable income received by the Client, otherwise by the Client and his spouse, during the last 4 months;
4.1.2. After having selected a personal consumer credit, the personal source of the sustainable income and documents supporting the receipt of the sustainable income:
a. When the income is received under the employment agreement, the information from the SODRA database or an account statement, or a certificate from the employer about the payment of wages (approved by the signature of the responsible person and seal, if the workplace has it);
b. When the income is received from the sports and performer’s activities under copyright agreements, documents confirming the payment of the author’s fee or copyright agreement, transfer-acceptance statement and income tax return for the previous calendar year;
c. When the income is received from rent of property, the rent agreement, a statement of account or documents confirming the payment of the income received from rent. If the Client is declared the income, the income tax return for the previous calendar year;
d. When the income is received from the activity of the individual enterprise, a copy of the company registration or an extended extract from the Register of Legal Entities (RLE), an account statement of the Client or documents confirming the payment of the income to the Client; If the Client is declared the income, the income tax return for the previous calendar year approved by the tax authority;
e. When the income is received from the individual economic activity or activities under the business certificate, a Certificate of Individual Economic Activity or a Business Certificate (if the income received from the activities under the business certificate), the income tax return for the previous calendar year, documents confirming the continuity of the activity (agreements, orders), documents confirming the income and expenses for the current year and the previous year (bank statements confirming the movement of cash, a register of accounting of income and expenses);
f. When the income received are regular benefits, the information from SODRA database or account statement and documents supporting the receipt of regular benefits in obtaining supporting documents;
g. Sources of the income other than those mentioned above and them supporting documents.
4.1.3. When a personal consumer credit is selected, a personal monthly amount of financial commitments of the Client, otherwise of the Client and (separately) the family and (separately) his spouse to financial institutions and other persons. The amount of these commitments is collected separately by groups:
4.1.3.1. The commitments under consumer credit agreements, excluding commitments under the linked consumer credit agreements and credit card agreements;
4.1.3.2. The commitments under mortgage agreements;
4.1.3.3. The commitments under lease (i.e. linked consumer credit) agreements;
4.1.3.4.The commitments under credit card agreements;
4.1.3.5. Financial commitments other than those mentioned above to financial institutions and to other persons providing financial services;
4.1.4. The credit history of the Client and information about that the Client is or was improperly implementing financial commitments, which is provided by “Creditinfo Lietuva”, UAB;
4.1.5. A confirmation of the Client whether the income received or expenses incurred by him or his family will change during the whole period of the consumer credit agreement. When a personal consumer credit is selected, the client confirms whether his personal income or expenses will change during the whole period of the consumer credit agreement. If the Client confirms that the income received by him or his family or their commitments will change during the whole period of the consumer credit agreement, or the personal consumer credit borrower confirms that his personal income or commitments will change during the whole period of the consumer credit agreement, the information, what change is expected and how it will affect the ability of the Client to implement his commitments under the consumer credit agreement.
4.1.6. The Client whose income can vary considerably (e.g. the income of dividends, shares, the income from investment activities. etc.) or on whose stability of the income is in question is assessed more conservatively.
4.2. If the Client does not provide all or part of the information, the consumer credit is not granted to the Client. The company shall store information collected (assessed) during the assessment of creditworthiness for 3 years from the date of the implementation of commitments under the consumer credit agreement, if the other legal acts do not set out a longer period for the storage of this information, data and documents, that consumer credit lenders, if necessary, could provide evidence that the proper assessment of creditworthiness of the borrower was conducted.
5. ASSESSMENT OF THE COLLECTED INFORMATION
5.1. All the information collected during the assessment of creditworthiness shall be based on evidence. If the Client and the Company cannot ground the information on the sustainable income, such information is not assessed. If the Client and the Company cannot ground the information on commitments, but the Client refers to the presence of such commitments, such information is assessed.
5.2. Only those sustainable income received by the Client and his family and their commitments which are held at the moment of the assessment of creditworthiness are assessed. In the case of the personal consumer credit, only those sustainable personal income received by the Client and his personal commitments, which are held at the moment of the assessment of creditworthiness are assessed.
5.3. When the consumer credit lender assesses the income of the consumer credit borrower, it takes into account the actual income received by the consumer credit borrower during the period of the assessment of creditworthiness, as well as the expected future income if the decrease in the income is based on objective data and the increase in the income is confirmed by the relevant evidence.
5.4. When the Client provides the income tax return for the previous calendar year without any additional documents confirming that the income declared by the Client has been received for the smaller period than a full calendar year, it is presumed that the income received for the whole previous calendar year and the sum declared is divided by 12 (twelve) months to obtain an average of the monthly income of the year declared by the Client. When the Client provides evidence according which it can be established that the income is received for the smaller period than a full calendar year, the income declared is divided by the number of months, when the declared income was actually received.
5.5. When assessing the data on the sustainable income received by the Client and his commitments collected and confirmed by evidence, the relations between the sustainable monthly income received by the Client and his family and their commitments are determined. When the Client selects a personal consumer credit, the relations between the personal sustainable monthly income received by the Client and his personal commitments are determined.
5.6. If the Client and the Company agree that the purpose of granting the consumer credit is the coverage of particular commitments of the Client to financial institutions and the Company ensures that consumer credit funds will be used specifically to cover (refinance) these specific commitments, the calculation of the sum of commitments do not include these particular commitments.
5.7. If the ratio set out in the Paragraph 5.5 of these Rules is Negative, a consumer credit is not granted to the Client.
5.8. If the ratio set out in the Paragraph 5.5 of these Rules is Positive, the Article 6 of these Rules is followed.
6. MAKING A DECISION ON GRANTING A CONSUMER CREDIT
6.1. The Consumer Credit is granted to the Client only if the amount of commitments of the client and of the particular payment of the Consumer Credit is less than 40 percent of the sustainable income received by the Client.
6.2. If the amount of commitments of the Client and of the payment of the Consumer Credit is equal to or exceeds 40 percent of the sustainable income received by the Client and his family or of the sustainable income received personally by the Client in the case of a personal loan, the Consumer Credit is not granted to the Client.
6.3. The maximum amount of the consumer credit, granted via the platform is set by the order of the head of the company.
6.4. The possibility to increase the amount of the consumer credit is not available to the consumer credit borrower.
7. FINAL PROVISIONS
7.1. These Rules shall enter into force on the date of their approval and are valid until it is canceled or changed by the order of the head of the company.
7.2. Any change or invalidity of a provision in these Rules due to the fact that imperative legal acts changed or expired does not affect the validity of other provisions in the Rules. In this case, instead of expired provisions, legal acts shall be directly followed.
7.3. These Rules shall be revised and changed no less frequently than once per calendar year if the requirements for the imperative legal acts have been changed, or it turns out that the process of the assessment of creditworthiness of consumer credit borrowers applied by the consumer credit lender is inefficient. The assessment is conducted according to the requirements in Article 21 of the Regulations.
7.4. These Rules are provided to the Supervisory Authority of the Bank of Lithuania.