Consumer Credit sourcebook - FCA

1 Consumer CreditsourcebookCONC ContentsConsumer Credit sourcebookCONC 1 Application and purpose and guidance onfinancial and What? Where? onfinancial difficultiesCONC 2 Conduct of business standards: principles for Credit -related regulated of business: lenders and restrictions on provision of Credit references: conduct of business: lenders and of business: Credit of business: high-cost short-term Credit (HCSTC) products onprice comparison of business: debt counselling, debt adjusting and providingcredit information of unsolicited Credit capacity and performance management policies, procedures andpractices2 Annex 1 Distance marketing information2 Annex 2 Abbreviated distance marketing informationCONC 3 financial promotions and communications with promotion general clear fair and not misleading rule and general warning for high-cost short-term promotions about Credit agreements not secured on promotions about Credit agreements secured on promotions and communications.

2 Credit promotions and communications: P2P promotions and communications: promotions and communications: debt counsellors and promotions not in approving certainfinancial promotionsn Release 17l Mar iCONC ContentsCONC 4 Pre-contractual of disclosure and adequate requirements and adequate explanations: requirements: Credit disclosure: continuous payment to be provided in relation to current account : unfair business practices: Consumer Credit lendingCONC 5 Responsible [deleted] assessment: before agreement [deleted] of business in relation to creditworthiness and affordability[deleted] of business: Credit assessment: P2P agreements [deleted] assessment: P2P agreementsCONC 5 ACost cap for high-cost short-term , purpose and from entering into agreements for high-cost from imposing charges under agreements for high-cost short-term cap for operating an electronic system in relation to of contravention of the cost 5 BCost cap for rent-to-own and on RTOfirms from entering into RTO and procedures for establishing benchmarked of contravention of the total cost of Credit 5 COverdraft and for overdrafts to be interest rates for unarranged overdrafts to be no more than the interestrates for arranged overdraftsn Release 17l Mar iiCONC of changes to charging 5 DOverdraft repeat and to identify and monitor repeat use of to be taken in the case of repeat repeat use on repeat use of overdraftsCONC 6 Post contractual of creditworthiness.

3 During agreement [deleted] to be provided on a current account agreement and onsignificant of of broking: conduct of contract: business contract business practices: Credit brokersCONC 7 Arrears, default and recovery (including repossessions) effective and appropriate arrears policies and of customers in default or arrears (including repossessions):lenders, owners and debt on status of and recovering of continuous payment of interest and with of customers with mental capacity relating to authority or status responsibilities in relation to accuracy and outsourced , disputed and deadlocked barred data to lead generators of sums in arrears under P2P agreements forfixed-sum of sums in arrears under P2P agreements for of default sums under P2P agreementsCONC 8 Debt Release 17l Mar iiiCONC standards: debt contract information and advice solution statements and debt repayment to contractual for debt counselling, debt advice and related management generators: includingfirm responsibility in dealing with of business: providing Credit information servicesCONC 10 Prudential rules for debt and resources of prudential resourcesCONC right to of withdrawal: P2P agreementsCONC 12 Requirements forfirms with interim permission for Credit -relatedregulated and purposeCONC 13 Guidance on the duty to give information under sections 77, 78and 79 of the Consumer Credit Act 14 Requirement in relation to 15 Agreements secured on App 1 Total charge for Credit rules.

4 And certain exemptionsApp charge for Credit rules for certain agreements secured on landApp charge for Credit rules for other agreementsn Release 17l Mar ivCONC ContentsApp of certain Credit agreements secured on landApp for high net worth borrowers and hirers and exemptionrelating to businessesTransitional provisions and SchedulesTP 5 Transitional provisions for prudential provisions in relation to debtmanagementfirmsTP 6 Transitional provisions forfinancial promotions and communications inrelation to catalogues 7 Transitional provision in relation to the Consumer Credit (Amendment No2) Instrument 2015TP 7 ATransitional provisions in relation to the Consumer Credit (EarlierIntervention and Persistent Debt) Instrument 2018TP 7 BTransitional provisions in relation to the Consumer Credit (High-CostCredit) Instrument 2018TP 8 Other transitional provisionsSch 1 Record keeping requirementsSch 2 Notification and reporting requirements (if any)Sch 3 Fees and other required paymentSch 4 Not usedSch 5 Rights of action for damagesSch 6 Rules that can be waivedn Release 17l Mar vConsumer Credit sourcebookChapter 1 Application and purpose andguidance on financial difficultiesn Release 17l Mar 1/1 CONC 1 : Application andSection : Application and purposepurpose and guidance onfinancial Release 17l Mar 1 and (1) The Consumer Credit sourcebook (CONC) is the specialist sourcebookfor Credit -related regulated activities.

5 (2) CONC applies as described in this chapter, unless the application of achapter, section or a rule is described differently in the chapters,sections or rules in purpose of CONC is to set out the detailed obligations that are specificto Credit -related regulated activities and activities connected to thoseactivities carried on by firms. These build on and add to the high-levelobligations, for example, in PRIN, GEN and SYSC, and the requirements in orunder the are reminded that other parts of the FCA Handbook and PRAH andbook also apply to Credit -related regulated activities. For example, thearrangements for supervising firms, including applicable reportingobligations, are described in the Supervision manual (SUP) and the detailedrequirements for handling complaints are set out in the Dispute Resolution:Complaints sourcebook (DISP). The Client Assets sourcebook (CASS) alsocontains rules about client money that apply in certain principles for Businesses: a principles for Businesses (PRIN) apply as a whole to firms with respect tocredit-related regulated activities and ancillary activities in relation to Credit -related regulated activities (see n PRIN 3).

6 In carrying on their activities, firmsshould pay particular attention to their obligations under:(1) Principle 1 (a firm must conduct its business with integrity);(2) Principle 2 (a firm must conduct its business with due skill, care anddiligence);(3) Principle 3 (a firm must take reasonable care to organise and controlits affairs responsibly and effectively, with adequate risk managementsystems);(4) Principle 6 (a firm must pay due regard to the interests of itscustomers and treat them fairly);CONC 1 : Application andSection : Application and purposepurpose and guidance onfinancial difficulties1n Release 17l Mar 1/3(5) Principle 7 (a firm must pay due regard to the information needs ofits clients, and communicate information to them in a way which isclear, fair and not misleading);(6) Principle 9 (a firm must take reasonable care to ensure the suitabilityof its advice and discretionary decisions for any customer who isentitled to rely upon its judgment);(7) Principle 10 (a firm must arrange adequate protection for clients'assets when it is responsible for them); and(8) Principle 11 (a firm must deal with its regulators in an open andcooperative way, and must disclose to the appropriate regulatorappropriately anything relating to the firm of which that regulatorwould reasonably expect notice).

7 CONC 1 : Application andSection : Who? What? Where?purpose and guidance onfinancial Release 17l Mar 1 What? Where?Subject to n CONC and n MCOB , CONC applies to a firm withrespect to carrying on Credit -related regulated activities and connectedactivities, unless otherwise stated in, or in relation to, a firm must:(1) ensure that its employees and agents comply with CONC; and(2) take reasonable steps to ensure that other persons acting on itsbehalf comply with on appointed (1) Although CONC does not apply directly to a firm's appointedrepresentatives, a firm will always be responsible for the acts andomissions of its appointed representatives in carrying on business forwhich the firm has accepted responsibility (section 39(3) of the Act).In determining whether a firm has complied with any provision ofCONC, anything done or omitted by a firm's appointed representative(when acting as such) will be treated as having been done or omittedby the firm (section 39(4) of the Act).

8 (2) Firms should refer to n SUP 12 (Appointed representatives), which setsout requirements which apply to firms using Credit -related regulated activities comprise Consumer Credit lending, Credit broking, debt counselling, debt adjusting, debt administration, debtcollecting, providing Credit information services, providing Credit references,operating an electronic system in relation to lending (but, other than in FEESand SUP, only insofar as it relates to a borrower or prospective borrowerunder a P2P agreement) and Consumer , except in relation to n CONC 3, applies with respect to activities carriedon by a firm:(1) with a customer whose habitual residence is in the UK from anestablishment maintained by the firm (or its appointedrepresentative) in the UK; orCONC 1 : Application andSection : Who? What? Where?purpose and guidance onfinancial Release 17l Mar 1/5(2) with a customer whose habitual residence is in the UK from anestablishment of the firm (or its appointed representative) outsidethe UK.

9 [deleted]Agreements secured on (1) CONC does not apply to Credit agreements secured on land, withsome limited exceptions as set out in (3) and (4), below.(2) Agreements secured by a second or subsequent charge on thecustomer s home are, where regulated, governed by MCOB from 21 March 2016 (subject to transitional provisions allowing for the earlieradoption of MCOB). For detailed guidance on the regulation ofsecured lending, see n PERG 4.(3) The agreements secured on land to which CONC may apply includethe following agreements (unless the agreement in question, oractivity in relation to it, is otherwise exempt or excluded):(a) an agreement under which the borrower is a relevant recipient ofcredit (within the meaning of article 60L of the RegulatedActivities Order) but is not one or more individuals or trustees;for example, a partnership comprising two or three partners, onebut not all of the partners in which is a body corporate; and(b) an MCD article 3(1)(b) Credit agreement secured on land, lessthan 40% of which is used as or in connection with a dwelling(whether by the borrower or anyone else) to the extent specifiedin n CONC (4) Broking in relation to the above agreements may be Credit brokingunder article 36A of the Regulated Activities Order, whether theagreement is regulated or exempt.

10 There are also some other securedcredit agreements which are exempt, but the broking of which maystill constitute Credit broking, because some exemptions aredisregarded by article 36A of the Regulated Activities Order. Oneexample is a loan of more than 25,000 entered into wholly orpredominantly for the purposes of a borrower s business and securedby a second or subsequent charge on the borrower s home: such aloan is not a regulated mortgage contract because it is a secondcharge business loan (as defined by article 61A of the RegulatedActivities Order), and is an exempt agreement by virtue of article60C(3) of the Regulated Activities Order; article 36A(4)(a) of theRegulated Activities Order disregards that to MCD article 3(1)(b) creditors and MCD article3(1)(b) Credit to n CONC :(1) the following provisions of CONC apply to an MCD article 3(1)(b)creditor and to an MCD article 3(1)(b) Credit intermediary:(a) n CONC and n CONC (application and purpose and guidanceon financial difficulties);CONC 1 : Application andSection : Who?