31 August 2022

The Case for a Key Information Document for Personal Loans

Iwan Doherty

By Iwan Doherty LinkedIn

The personal loans sector still has work to do when it comes to transparency. A key information document could be the answer.

Customers who need a personal loan should be given clear information on all the fees they could possibly be charged before they make an application. For many, however, this information is hard to find.

Providers are generally bad at disclosing fees involved with personal loans, such as default fees and early settlement charges, on their websites. To find out what these fees are, you usually have to go through multiple pages, or search through badly laid out FAQs - if you can find them at all.

Terms and conditions documents, which sometimes give a run down of fees, are also frequently impossible to access on loan providers’ websites.

Making fees clear

To solve this problem, personal loan providers should create an easy-to-access document that contains vital information on personal loans, including:

  • the representative APR
  • the maximum APR
  • default fees
  • early settlement charges
  • how long it takes to get a decision
  • how long it will take for the customer to receive their money
  • any requirements borrowers have to fulfil

Other banking sectors are required by regulation to provide similar documents. Bank accounts must have a Fee Information Document (FID) with all fees and charges associated with the account. Credit card providers have been producing summary boxes for almost 20 years - and we’ve seen them introduced in the savings sector more recently.

Now is a good time for personal loan providers to follow suit with a key information document of their own, since companies should be prioritising improving customer understanding in light of the Financial Conduct Authority’s (FCA) new Consumer Duty rules.

These rules require customers to be ‘given the information they need, at the right time, and presented in a way they can understand.’ A key information document for personal loans would go some way to meeting this requirement, because it would allow customers to better understand all the fees and charges associated with the loan, and so make more informed decisions before they make an application.

f you would like to talk to us about how to meet the Consumer Duty challenge, please get in touch at