Certified Regulatory Compliance Manager (CRCM) — Question 29

Below mentioned list shows the significant risks of _______________.
Borrowers with cash-flow difficulties
Borrowers with no lower-cost credit alternatives
Minimal analysis of borrower's ability to repay the loan
Minimal review of borrower's credit history

Credit is usually unsecured -

Answer options

Correct answer: A

Explanation

The correct answer is A, Payday lending, as it often involves borrowers facing cash-flow problems and lacking cheaper credit options, leading to significant risks. Options B and C, Loan flipping and Equity stripping, pertain to different lending practices and do not directly correlate with the risks outlined in the question. Option D, None of these, is incorrect since payday lending clearly aligns with the mentioned risks.