A recent review by the regulator has listed the good practices as well as areas for improvement in digital loan processes.

According to the review, lenders' online and in-app application processes can help prospective borrowers understand what they’re signing up for, but the processes could be improved to enable consumers to make more informed financial decisions.

As a positive, the FCA said that some lenders were using shorter, simplified language and providing explainer videos that helped customer understanding.

However, some digital loan process designs lacked “positive friction”, which slows decision-making, and excluded information consumers needed, for example, on costs.

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The review also stated that customers can be driven towards making quick decisions which may not be in their best interests or consistent with expectations under the Consumer Duty.

Other areas which the regulator said could improve were meeting customer needs, supporting vulnerable clients, bias in layouts whereby the architecture of some platforms led clients towards certain decisions and sometimes bad outcomes, lack of product information, as well as speed of journey over customer interests.

Alison Walters, director of consumer finance at the FCA, commented: “Online and app-based applications can make it easier for people to get the credit they need to navigate their financial lives.

“But poorly designed applications could mean people bypass important information. We're sharing examples of what works and what doesn't, so lenders can better support their customers.”