Doireann's housing loan was approved by Beta Bank. Following the drawdown of the loan it was discovered that Beta Bank had not completed a creditworthiness assessment correctly on Doireann. Beta Bank should:

• A. Must ensure that Doireann repays the money advanced to her within 30 days.
• B. Must ensure that the creditworthiness assessment is carried out again and marked on her file.
• C. Cannot cancel the credit agreement as it was issued on the basis that the creditworthiness assessment was incorrectly conducted.
• D. Should cancel the existing credit agreement immediately and reissue it following the completion of a new creditworthiness assessment.

Answer: (B)

When a lending decision is found to be based on an incorrectly conducted credit assessment, the lender must redo the assessment and document the updated result on the borrower's file. This ensures the decision reflects the borrower's true creditworthiness and maintains a clear audit trail for regulatory and accountability purposes. Reassessing with accurate methods and recording the outcome protects both the lender and the borrower, and aligns with responsible lending practices.

The other possibilities aren’t appropriate remedies for this situation. There’s no automatic requirement to demand immediate repayment simply because the assessment was flawed. Nor does the situation automatically nullify the existing agreement or mandate canceling and reissuing the loan, unless the new assessment fundamentally changes the terms or risk analysis. Redoing the creditworthiness assessment and updating the file directly addresses the error while preserving the loan where appropriate.