What: A possibility to decide whether the account should be locked (capped) when either:
Option A: Interest Accrued (new method) reaches X% of the defined threshold
Option B: Interest Applied (existing method) reaches X% of the defined threshold
With this approach, a loan account should be locked (capped) when the amount of the (interest balance + interest accrued) exceeds defined limit of X% outstanding principal balance / original loan amount (raised with #APP-I-1027).
On the day when the capping limit is reached:
- interest should be applied to the previous day (to avoid applying interest above the agreed threshold but allow organisations to recognise the profit earned up to day)
- account should be locked / capped
- interest should not be applied anymore
Why: Organisations that use capping, or are legally obligated to cap/lock accounts when charges reach a certain limit, cannot under any circumstances allow for the total charges balance to exceed that limit at any point in time. Therefore, the account should be locked before interest/fees/penalty that would cause the breach are applied.
At the same time, the profit from charges that are still within the limit should not be withheld. Therefore, the amount if interest accrued / fees / penalties accrued that can be still applied within the limit - should be applied, and account should only be locked afterwards.