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CONC 5.5 Creditworthiness assessment: P2P agreements

[Note: Until the end of 30 September 2014, transitional provisions apply to CONC 5.5: see CONC TP 4.2]

Application

CONC 5.5.1RRP

This section applies to a firm with respect to operating an electronic system in relation to lending in relation to a prospective borrower under a P2P agreement.

CONC 5.5.2GRP
  1. (1)

    This section contains rules that apply to the person operating the electronic system that facilitates persons becoming lenders and borrowers under P2P agreements, in contrast to CONC 5.2 which applies to the lender.

  2. (2)

    A P2P agreement may also be a credit agreement or a regulated credit agreement in which case applicable provisions of the CCA or CONC will apply to such agreements. The extent to which CCA provisions apply to a lender will depend largely on whether the lender makes the credit agreement in the course of carrying on a business.

Creditworthiness assessment

CONC 5.5.3RRP
  1. (1)

    Before a P2P agreement is made, a firm must undertake an assessment of the creditworthiness of the prospective borrower.

  2. (2)

    A firm carrying out the assessment in (1) must consider:

    1. (a)

      the potential for the commitments under the P2P agreement to adversely impact the prospective borrower's financial situation, taking into account the information of which the firm is aware at the time the P2P agreement is to be made; and

    2. (b)

      the ability of the prospective borrower to make repayments as they fall due over the life of the P2P agreement, or for such an agreement which is an open-end agreement, to make repayments within a reasonable period.

  3. (3)

    A creditworthiness assessment must be based on sufficient information obtained from:

    1. (a)

      a prospective borrower, where appropriate; and

    2. (b)

      a credit reference agency, where necessary.

  4. (4)

    This rule does not apply to an agreement under which a person takes an article in pawn.

CONC 5.5.4RRP

Where CONC 5.5.3 R applies to a firm, the firm must comply with CONC 5.3.2 R, CONC 5.3.4 R, CONC 5.3.5 R, CONC 5.3.6 R and CONC 5.3.7 R to the same extent as if it were the lender under an agreement to which those rules apply and should take into account the guidance in CONC 5.3 to the same extent, and should also take into account CONC 5.2.3 G and CONC 5.2.4 G treating them as guidance on CONC 5.5.3 R.

CONC 5.5.5RRP

A firm must consider sufficient information to enable it to make a reasonable assessment required by CONC 5.5.3 R.

[Note: paragraph 4.21 of ILG]

CONC 5.5.6RRP

Before a P2P agreement is entered into under which a person takes an article in pawn, the firm must:

  1. (1)

    undertake the assessment referred to in CONC 5.2.2R (1) of the prospective borrower; and

  2. (2)

    comply with CONC 5.3.2 R, CONC 5.3.4 R, CONC 5.3.5 R, CONC 5.3.6 R and CONC 5.3.7 R to the same extent as if it were the lender under an agreement to which those rules apply, and should also take into account the guidance in CONC 5.2.3 G and CONC 5.2.4 G and CONC 5.3 to the same extent.