TP 7A Transitional Provisions in relation to the Consumer Credit (Earlier Intervention and Continuing Debt) Instrument 2018. CONC, except in relation to■CONC 3, applies in relation to activities carried out by a firm:.
Agreements secured on land
Application to MCD article 3(1)(b) creditors and MCD article 3(1)(b) credit intermediaries
This will mean that the agreement will not be subject to CONC, but some rules in MCOB will still apply (see■CONC 1.2.9G). 3) A section 3(1)(b) credit agreement that does not fall within paragraph (1) entered into on or after 21 March 2016 and before 21 July 2022 cannot be an exempt agreement under section 60H , but the borrower may choose to waive the protections and remedies applicable to regulated credit agreements other than those which have transposed or implemented the MCD. This will mean that the agreement will not be subject to CONC, but some rules in MCOB will still apply (see
Application where home financing agreements are facilitated by a P2P platform
Guidance on financial difficulties
In CONC (unless otherwise stated in or in relation to a rule), the following things, among others, that a company is aware of or should reasonably be aware of may indicate that a customer is in financial difficulty:.
Consumer Credit sourcebook
Conduct of business
Conduct of business Section 2.1 : Application
Application
General principles for credit-related regulated activities
General principles
Duty not to use misleading names
Effect on other rules and legislation
Restriction on marketing or providing an optional product for which a fee is payable
Conduct of business: lenders and restrictions on provision of credit
Application
General conduct
Provision of credit card cheques
Credit references: conduct of business: lenders and owners
Disclosure of name and address of credit reference agencies consulted
Searching credit files
Conduct of business: credit broking
Conduct of business: credit broking
Conduct of business
Conduct of business: credit references
A company conducting a credit reference check may not leave evidence of an application in a credit file when a customer is not yet ready to apply.
Unfair business practices: credit brokers
■CONC 2.5.10 R)) or other product or service related to a credit agreement or consumer lease agreement (whether or not the product or service is optional or required as a condition of the credit agreement or consumer lease agreement):. a) pressure the customer to buy a product or service; or [Note: paragraph 2.62, item 2 JGPPI].
Guidance on unfair business practices
A Conduct of business: high-cost short-term credit (HCSTC)
This section applies to a company that owns or operates a website that displays the terms on which high cost short-term credit products are available from various lenders (referred to in this section as a “price comparison website”) and in relation to which it:. Information on high-cost short-term loans that are not based on commercial interests or relationships.
HCSTC price comparison website functionality
In response to a request to perform a search for a high-cost short-term credit product, the firm must ensure that the price comparison website:. Such payment should also not affect whether information about a loan from a lender or credit broker whose loans the firm arranges to compare or claims to compare appears in the results of a search.
HCSTC price comparison website financial promotion
3) ■CONC 2.5A.6R Does not require the company to compare loans from a lender or credit intermediary where it has not agreed to do so with that lender or credit intermediary, nor where it does not purport to compare loans from that lender or credit intermediary . 5) ■CONC 2.5A.6R does not prevent the company from allowing a customer to re-sort the results of a query in a different order once the first results are displayed in order of total amount payable.
HCSTC price comparison website market coverage
Conduct of business: debt
Unfair business practices
Distance marketing
This section does not apply to an authorized professional firm in relation to its unusual regulated activities.
The distance marketing disclosure rules
When a firm makes a voice telephony communication to a consumer, it must make its identity and the purpose of its call expressly clear at the beginning of the conversation. A firm must ensure that information about contractual obligations to be communicated to a consumer during the pre-contractual phase accurately reflects the contractual obligations that would arise from the law presumed to apply to the distance contract if that contract is concluded.
Terms and conditions, and form
Commencing performance of the distance contract
Exception: successive operations
Exception: voice telephony communications
Exception: means of distance communication not enabling disclosure
Exception: contracts for payment services
Consumer’s right to request paper copies and change the means of communication
Unsolicited services
Mandatory nature of consumer’s right
Contracts governed by law of a third party state
Conduct of business Section 2.8 : E-commerce
- E-commerce
This section applies to a firm carrying on an e-commerce activity from a UK establishment with or to a UK person.
Information about the firm and its products or services
Requirements relating to the placing and receipt of orders
The contractual terms and conditions provided by a firm to an ECA recipient must be made available in a manner that allows the recipient to store and reproduce them.
Exception: contract concluded by e-mail
Prohibition of unsolicited credit tokens
Prohibition
Mental capacity guidance
The Ministry of Justice has issued an act on mental capacity, which, among other things, contains information on indications of mental capacity limitations and on how to assist people in making decisions.
Mental capacity
A company should assume that a customer is sane at the time the decision is to be made, unless the company knows, or is told by a person it reasonably believes it should know, or reasonably suspects, that the customer is a has a lack of capacity. When a company understands or reasonably suspects that a customer has a CONC 2.10.6 G condition, it does not necessarily mean that the customer lacks the mental capacity to make an informed decision about borrowing.
Indications that a person may have some form of mental capacity limitation
When a firm reasonably suspects that a customer has, or may have, some form of mental capacity limitation that would limit the customer's ability to make a borrowing decision, the firm should not consider the customer to be lack of capacity to make the decision, unless the firm has taken reasonable steps without success to help the client make a decision. Among the most common possible causes of mental capacity limitations are the following examples, a mental health condition, dementia, a learning disability, a developmental disorder, a neurological disability or brain injury, and intoxication caused by alcohol or drugs (including prescription drugs).
Practices and procedures
When explaining credit agreements, companies should present clear information without jargon so that the customer can understand it as much as possible. Where a company knows or reasonably suspects that a customer has or may have one of the conditions in ■CONC 2.10.6 G, this could reasonably act as a reason for the company to consider possible specific steps to implement company practices and assessment procedures: .
Allowing sufficient time for decisions
As the Mental Capacity Act states, it is important to balance a person's right to make a decision with that person's right to safety and protection when they are unable to make decisions to protect. Companies' practices and procedures should be designed to help customers whom the companies understand have, or are reasonably suspected of having, mental capacity limitations to overcome as far as possible the effects of the limitations and place them, as far as possible, on an equivalent basis for customers who do not have such restrictions, to increase the likelihood that customers can make informed lending decisions.
Sustainability of borrowing
Remuneration and performance management policies, procedures
Purpose
These risks can also arise when an individual's formal (for example, annual appraisals) or informal (for example, day-to-day interactions with their line manager) performance management focuses on targets or measures of loan volume or value. secured or debt collected. 4) These risks may also arise from a firm's policies for rewarding such individuals for performance in performing unregulated activities that are financed by credit agreements in connection with which the firm conducts consumer credit lending or credit brokerage. An example is when a firm induces an individual to sell or provide goods or services, the purchase of which can be financed (in whole or in part) by a credit agreement in respect of which the firm carries out credit intermediation or consumer credit lending .
Requirements
The use of incentives in these circumstances creates the risk that the individual may, for example, provide credit or arrange to finance purchases when it is not appropriate to do so.
Non-Handbook guidance
Conduct of business Annex 1 standards: general
2Distance marketing information
Conduct of business Annex 2 standards: general
2Abbreviated distance marketing information
Financial promotions and
Financial promotions Section 3.1 : Application
Application
Who? What?
Firms are reminded that the rules and guidelines in ■CONC 3.9 also apply to financial promotions and customer communications related to debt counseling and debt adjustment. Businesses should note that the exclusion of image ads in CONC 3.1.7R (1) is subject to compliance with the rules specified in (2), including those requiring the inclusion of a representative APR in specified circumstances (although the rules in■ CONC 3.5.9Rover the wording that must accompany a representative APR do not apply to video advertising).
Where?
Companies should not include any information not mentioned in ■CONC 3.1.7R (1) and should avoid the use of names, logos or addresses, for example, which try to convey additional product or cost related information.
Financial promotion general guidance
Meaning of “prominent”
The clear fair and not misleading rule and general requirements
An enterprise must ensure that, where a communication or financial advertisement contains a comparison or contrast, the comparison or contrast is presented in a fair and balanced manner and is meaningful.
General requirements
This rule does not apply to a financial promotion or communication in relation to a credit agreement under which a person pledges an article and the customer's total financial liability (including capital, interest and all other costs) in terms of the agreement be limited to the proceeds of sale which will represent the true market value (within the meaning of section 121 of the CCA) of the article or articles pledged by the customer.
Guidance on clear, fair and not misleading
In a financial promotion or other communication that includes a toll-free telephone number, a business must prominently indicate the likely total cost of a toll call, including the price per minute of a call, the likely duration of calls, and the total cost of a call. conversation. cost to the customer if the customer calls for the full estimated duration. Companies should take into account the effect of the call cost rule in ■GEN 7.
Unfair business practices: financial promotions and communications
In a financial promotion or other communication that includes a toll-free telephone number, a business must prominently indicate the likely total cost of a toll call, including the price per minute of a call, the likely duration of calls, and the total cost of a call. conversation. the customer would have to pay if the customer calls for the full estimated duration. Businesses should consider the effect of the call cost rule in■GEN 7. Unfair Business Practices: Financial Promotions and Communications.
Guidance on misleading introductions
Buy now pay later” or similar offers
The average consumer is likely to need information on these matters in order to make an informed decision about whether to enter into a BNPL agreement, or whether and how to make use of credit available under an existing BNPL agreement.
Non-business overdraft agreements
Risk warning for high-cost short- term credit
Risk warnings
Financial promotions about credit agreements not secured on land
Prohibition on financial promotion where goods etc. not sold for cash
Content of financial promotions
Paragraph (1)(a) also does not apply where the financial promotion only relates to credit agreements in respect of which the APR is 0%.
Guidance on showing interest rates and cost of credit
Representative example
For the purposes of (1)(a), where a credit agreement provides for different drawing methods at different interest rates, the interest rate shall be deemed to be the highest rate applicable to the most common drawing mechanism for the product to which the agreement relates. a) listed in a clear, concise and visible way;.
Guidance on the representative example
These guidelines are relevant to the question of whether account fees should be included in the calculation of the APR for an authorized non-business overdraft agreement. The following are examples of situations where it is likely that an account fee should be included in the calculation of the total charge for credit and the APR for an authorized non-business overdraft agreement. i).
Other financial promotions requiring a representative APR
A financial promotion which states that a sum of money is available for opening an account, other than a current account mortgage, which is a payment account within the meaning of the Payment Accounts Regulation and which does not refer to the availability of credit under a non authorized - the business overdraft agreement in respect of that account shall not be deemed to include an inducement to apply for credit or to enter into an agreement under which credit is granted for the purposes of (1)(c). For the purposes of ■CONC 3.5.7R(1)(b), a comparison with another person, product or service includes a reference (whether stated or implied) to:. a) the conditions in which, or the way in which the loan is offered or made available; or. b) the nature or quality or any other aspect of the credit-related service that the person offers or offers (or does not offer or does not offer).
Annual percentage rate of charge
Ancillary services
6) ■CONC 3.5.7 Applies to a business in respect of a financial promotion for an approved non-business overdraft agreement, except a business of a type listed in ■CONC 5C.1.2R(2). This rule does not apply to a financial promotion for an approved non-commercial overdraft agreement.
Security
Restricted expressions
Total charge for credit and APR
Promotions relating to non-business overdraft agreements
Financial promotions about credit agreements secured on land
Definitions
Prohibition on financial promotion where goods etc not sold for cash
Statements in relation to security
CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT OF YOUR DEBT.” a) should be given more prominence in a financial promotion than is given to:. i) any rate other than the typical APR; and (ii) any indication or inducement as referred to in. In the case of a financial promotion in relation to an agreement between borrower and lender which allows the customer to be overdrawn on a current account the lender of which is the Bank of England or an authorized person authorized to accept deposits, instead of the typical APR, can there be a reference to the statement of:. a) a rate, expressed as an interest rate, being a rate determined as the rate of the total cost of credit calculated on the. assumption that only interest is included in the total cost of credit, and.
Total charge for credit and any APR: assumptions about running account credit
In the case of a contract under which all repayments except one are equal and one repayment does not differ from the others. a repayment amounting to several whole pennies more than the loan repayments may be included in the finance promotion on the agreement at the interest rate set out in ■CONC App 1.1.9 Ras if this repayment was equal to other repayments to be made under contract. . Total cost for the loan and any APR: the interval tolerance between the due date and the first repayment.
Information that CONC 3.6.4R(1) may require to be included in a financial promotion
Financial promotions and
Credit brokers’ registered name, and status
A Financial promotions and
Status
Financial promotions and communications: lenders
This section applies to a financial campaign or a communication with a customer in relation to consumer credit lending. An agreement is likely to be unsuitable under ■CONC 3.8.2R (3), including in the following situations where a company:. 1) promotes, suggests or advises to take out a secured loan or to take out a secured loan to replace or convert an unsecured loan when it is clearly not in the best interest of the person concerned to do so at the time; or (2) promotes, suggests or advises obtaining high cost short-term credit.
Financial promotions and
Financial promotions and communications
Contents of financial promotions and communications
In■CONC 3.9.3R (8) reference to impartial sources of information should include making clients aware of publications relating to creditors published by the Insolvency Service (England and Wales), Department for Enterprise, Trade and Investment ( Northern Ireland) or debt advice published by the Scottish Government. An example of unfairly directing a customer to a premium phone number would be directing a person who wants to complain to such a number.
On-line promotion of debt solutions
Financial promotions not in writing
Promotions that are not in writing
Umbrella requests" or "permissions to call" are usually signed by a borrower upon entering into a borrower-borrower agreement (or shortly thereafter) and are intended to allow the lender to visit the borrower's home to discuss other loans at any time, over the duration of the agreement or longer. The FCA would expect the following for a company to comply with sections 48 and 49 of the CCA:. a) the request must be a positive action by the borrower, taken specifically to discuss other loans;
Failure to comply
Not approving certain financial promotions
Requirement not to approve certain financial promotions
Pre-contractual requirements
Content of quotations
Lenders and owners: contents of quotation for certain agreements
YOUR HOME IS AT RISK IF YOU DON'T CONTINUE APPLYING FOR A MORTGAGE OR OTHER LOAN SECURED ON IT.". YOUR HOME IS AT RISK IF YOU DON'T KEEP UP PAYMENTS ON A MORTGAGE SECURED AGREEMENT OR OTHER INSURANCE ON YOUR HOME.”.
Credit brokers: contents of quotation for certain agreements
CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT.
Interpretation: quotations
Pre-contract disclosure and adequate explanations
Other disclosure requirements
Pre-contractual information disclosed under disclosure regulations and pre-contractual explanations required under ■CONC 4.2.5 must take into account any expressed preferences or information provided by the customer where the firm would in principle agree to offer credit on these terms.
Pre-contractual adequate explanations
4A) The explanation of the conditions in ■CONC 4.2.15R(3A) must be given to the customer both orally and on a durable medium. In deciding the level and extent of the explanation required by ■CONC 4.2.5 R, the lender or credit broker should consider (and each should ensure that anyone acting on its behalf should consider) the extent to which it is appropriate to do so, factors including:.
Adequate explanations in relation to particular regulated credit agreements
A lender or credit broker may require an acknowledgment of having given an explanation and of receipt of any written information forming part of the explanation, but not an acknowledgment of its sufficiency.■CONC 4.2.13 R does not prevent the lender or credit broker who asks if the customer has understood a given explanation. If, for example, failure to meet the conditions for using the offer will result in interest being charged at a higher rate, or from
Guidance for adequate explanations where agreements are marketed by distance or electronic means
For telephone or face-to-face transactions, the interaction between the customer and the firm's representative is also important. Where a regulated credit agreement is a modifying agreement under section 82(2) of the CCA, the requirements in ■CONC 4.2 apply before the agreement is entered into.
Credit agreements where there is a guarantor etc
Pre-contractual requirements and adequate explanations: P2P
Pre-contractual requirements
Adequate explanations
Where ■CONC 4.3.4 applies to a firm, the firm must comply with the rules and comply with the instructions, in ■CONC 4.2 to the same extent as if it were the lender under an agreement to which these rules apply. For the purposes of ■CONC 4.3.6R, a warning will not be treated as prominent unless it is presented in such a way that it is likely to attract the attention of the average customer.
P2P agreements where there is a guarantor etc
Pre-contractual requirements: credit brokers
This section applies to a company engaged in credit intermediation in connection with a regulated credit agreement.
Credit broking information notice
Commissions
Commissions lenders to credit brokers
Commissions: credit brokers
In circumstances where the credit broker is required to the existence and nature of any commission, fee or other compensation under. G 4.5.7. is known, the probable amount) of any commission or fee or other remuneration payable to the credit broker by the lender or owner or a third party.
Accrued commissions
Pre-contract disclosure: continuous payment authorities
Disclosure of continuous payment authorities
A firm must include the terms of the ongoing payment authority, in plain and understandable language, as part of the credit agreement or consumer lease agreement presented to the customer or P2P agreement presented to the lender.
Agreements where there is a guarantor etc
Information to be provided in relation to current account
Information on entering into current account
Additional requirements in relation to certain current accounts
Pre-contract: unfair business
Responsible lending
- Application [deleted]
55.2Creditworthiness assessment
A Creditworthiness assessment
Interpretation
Creditworthiness assessment
The subject matter of the creditworthiness assessment
The customer’s income and expenditure
Non-discretionary expenses include expenses for other persons whose financial obligations the client fulfills in whole or in part. In these circumstances, references in this section to the customer's non-discretionary expenses should be taken to include the other person's non-discretionary expenses.
Scope, extent and proportionality of assessment
The firm may, where appropriate, take into account information obtained in the course of previous dealings with the client. Factors that will affect that level of risk include the actual or. potential cost of the credit and the total amount payable in absolute terms and relative to the customer's financial circumstances, where known.
Open-end agreements
Assumptions in relation to running-account credit
It may or may not be reasonable to make further assumptions about the initial reasonable period referred to in.
Lending to joint borrowers and businesses
Creditworthiness assessment where there is a guarantor
For purposes of this rule, a security does not include a legal or equitable mortgage or a pledge. In this guide, references to "payment" refer to any payment under the warranty (excluding any charge for non-compliance with the warranty).
Policies and procedures for creditworthiness assessment
A company should not complete some or all parts of a credit application under a regulated credit agreement that is intended to be completed by the customer without the customer's consent or unless the customer has been advised to review the application (and given a full opportunity to do so). ) before signing the agreement. A company should not accept a credit application under a regulated credit agreement where the company knows or has reasonable grounds to suspect that the customer has not been truthful in completing the application in relation to information relevant to the creditworthiness assessment.
55.3Conduct of business in relation to
Conduct of business: credit brokers
When giving explanations, advice or when giving recommendations, the company must take into account the customer's needs and circumstances. In fulfilling (1), the firm must take due account of whether the credit product is affordable and whether there are any factors that the firm knows or reasonably should know that might make the product unsuitable for that customer.
55.5Creditworthiness assessment: P2P
A Creditworthiness assessment: P2P agreements
In relation to ■CONC 5.5A.11R, there may be circumstances where the risk of one repayment being missed or delayed is relevant. If the borrower intends to make repayments (in whole or in part) using savings or other assets, the company must take into account:.
The borrower’s income and expenditure
With respect to an open-ended agreement, the firm must make a reasonable assumption about the likely duration of the credit that must take into account:. Likewise, it may be reasonable to consider the nature and resources of the business.
5A.1 Application, purpose and guidance
Statutory context and purpose
Guidance on application and interpretation
5A.2 Prohibition from entering into agreements for high-cost short-
Cost caps: entering into agreements: Total cost cap
Cost caps: entering into agreements: Initial cost cap
Determining the amount of credit provided
Refinancing
If the effect of a replacement agreement is to repay an outstanding amount under a previous long term credit agreement before the date on which the previous agreement is due to be repaid, any indemnity will be imposed under the previous agreement which as a result never becomes due of the early settlement is disregarded for the purposes of ■CONC 5A.2.10 R. An enterprise shall not count any amount provided to the borrower to repay any amount of credit outstanding under a prior long-term credit agreement or any other amount provided to pay any outstanding charges under the prior agreement:.
Default cap
CONC 5A : Cost cap for high costs Article 5A.2 : Prohibition to enter into. short-term credit agreements for long-term short-term credit. replacement agreement provides for the payment by the borrower of one or more costs related to a breach of the agreement by the borrower, together with such costs provided for by the earlier one. agreement or in any related agreement with any of those agreements exceed or are capable of exceeding £15.
Connected agreements
Prohibition on compound interest
5A.3 Prohibition from imposing charges under agreements for high-cost
Cost caps: imposition of charges etc.: Total cost cap
Cost caps: imposition of charges etc.: Initial cost cap
A company may not charge one or more charges by means of an agreement that modifies or supplements a prior term short-term credit agreement if the amount of the charges or charges to be paid by the borrower is taken. A company may not impose on a borrower in the context of an agreement for long-term short-term credit:.
Connected agreements and guidance on charges before assignment
CONC 5A : Cost cap for high costs Article 5A.3 : Impose prohibition. short-term credit costs in the context of high-cost short-term credit agreements. CONC 5A.3.3 R(Initial Cost Cap) and■CONC 5A.3.18 R(Standard Cap) include these charges and, if the charge is not provided for in the term short-term credit agreement, the agreement providing the payload is a related agreement.
5A.4 Cost cap for operating an
Cost cap rules for operating electronic systems in relation to lending: Total cost cap
Cost cap rules for operating electronic systems in relation to lending: Initial cost cap
A company must not make it easier for a person to become a borrower under an agreement on high-cost short-term credit that replaces a previous agreement. A company must not make it easier for a person to become a borrower under an agreement on high costs on short-term credit if:.
5A.5 Consequences of contravention of the cost caps
Contravention of cost caps and unenforceability of agreements and obligations
CONC 5A : Cost cap for high costs Section 5A.5 : Consequences of. short-term credit breach of the cost ceilings. What is a reasonable period for the borrower to repay the credit depends on the circumstances of the case, including the terms of repayment according to the agreement.
5A.6 Interpretation
5A.6.2 The meaning of the term "impose one or more charges on a borrower under a term short-term credit agreement" is set out in. The meaning of "imposing" with respect to compensation in this section is broad and includes, but is not limited to, situations where a company:.
5B.1 Application and guidance
CONC 5B: Cost cap for section 5B.1: Application and guidance. amending or supplementing an existing RTO agreement does not involve the supply of additional or different goods. In this chapter, a word or expression in bold (other than headings and titles) has the meaning given in ■CONC 5B.7.
5B.2 Prohibition on RTO firms from entering into RTO agreements
Entering into, varying or supplementing agreements
In assessing whether a given cash price is so far out of the range of cash prices it has found that no reasonably informed UK consumer is likely to pay that cash price, an RTO company should in particular consider:. a) the difference between that spot price and the other two benchmarking spot prices found by the RTO company; CONC 5B.2.2R(2)(c) when identifying comparable goods includes brand, quality, functionality, performance, size and color, but only where these characteristics can reasonably be expected to affect the cash price.
Establishing a benchmarked price for goods that will be new to the UK market
Timing
Entering into, varying or supplementing agreements: total cost of credit cap
5B.3 Anti-avoidance
5B.4 Policies and procedures for
Obligations in competition law