Computer says - this is why

Lenders will be forced to disclose their reasons for refusing a customer a mortgage under proposed plans announced by the European Commission today.

In its Directive it says where an application has been rejected the lender must inform the consumer immediately and without charge as to the reasons for the refusal.

It says: “Where the application is rejected on the basis of an automated decision or a decision based on method such as automated credit scoring, the creditor must inform the consumer immediately and without charge and that the creditor explains the logic involved in the automated decision to the consumer.”

It says the consumer should have the opportunity to request for the decision to be reviewed manually.

The EC says when the applicant has been turned because the lender has consulted a database or credit agency the consumer must be told the name of the database and be given the right to rectify any information held on the database.