CONC 6.7 Post contract: business practices

1. (1)

   This section applies to a firm with respect to consumer credit lending.

2. (2)

   CONC 6.7.17 R to CONC 6.7.26 R also apply to a firm with respect to operating an electronic system in relation to lending in relation to a borrower under a P2P agreement and references in those provisions to a firm refinancing an agreement refer to any action taken by an operator of an electronic system in relation to lending which has the result that a P2P agreement is refinanced.

3. (3)

   7CONC 6.7.3AR to CONC 6.7.3DG and CONC 6.7.27R to CONC 6.7.40G do not apply in relation to a credit card of a type that the firm promotes to customers solely for the purposes in each case of the customer’s business (a “business credit card”).

4. (4)

   CONC 6.7.2R to CONC 6.7.3G do not apply to retail revolving credit.5

5. (5)

   CONC 6.7.3AR and CONC 6.7.3BG do not apply to the extent that the firm follows the guidance entitled Credit cards (including retail revolving credit) and coronavirus: updated temporary guidance for firms, except where the guidance indicates that the firm should act in accordance with CONC 6.7.3AR.12

1. (1)

   7A firm must monitor a customer’s repayment record and take appropriate action where there are signs of actual or possible repayment difficulties.

2. (2)

   7This rule does not apply in relation to a credit card unless the card is a business credit card (see CONC 6.7.1R(3)).

[Note: paragraph 6.2 of ILG]

7A firm must monitor a retail revolving credit customer’s or a5 credit card customer’s repayment record and any other relevant information held by the firm and take appropriate action where there are signs of actual or possible financial difficulties.

7A firm must establish, implement and maintain an adequate policy for identifying and dealing with customers showing signs of actual or possible financial difficulties, even though they may have not missed a payment.

A firm must first allocate a repayment to the debt subject to the highest rate of interest (and then to the next highest rate of interest and so on)1 for:

1. (1)

   the outstanding balance on a credit card; or

2. (2)

   the outstanding balance on a store card; or

3. (3)

   a credit card or a store card, in relation to which there is a fixed-sum credit element, to repayments beyond those required to satisfy the fixed instalments.

1. (1)

   Subject to (4), a9 firm must set the minimum required repayment under a regulated credit agreement for a credit card or a store card at an amount equal to at least that amount which repays the interest, fees and charges that have been applied to the customer's account, plus one percentage of the amount outstanding.

   [Note: paragraph 6.4 of ILG]

2. (2)

   Where (1) applies and a firm applies interest to a period of more than one month, for the purpose of calculating the amount of the interest part of the minimum required repayment the firm may disregard any interest applied in respect of a period prior to the period of the statement in question.

   [Note: paragraph 6.4 (box) of ILG]

3. (3)

   Paragraph (1) applies to agreements made on or after 1 April 2011.

4. (4)

   Paragraph (1) does not apply in circumstances where the firm, in order to allow the customer to defer (in whole or part) the making of repayments under the regulated credit agreement if they choose to do so in the circumstances and for the duration set out in the guidance entitled Credit cards (including retail revolving credit) and coronavirus: temporary guidance for firms or the guidance entitled Credit cards (including retail revolving credit) and coronavirus: updated temporary guidance for firms, varies or has varied 12the regulated credit agreement so as not to oblige the customer to make minimum required repayments for that duration. 9

A firm under a regulated credit agreement for a credit card or a store card must provide a customer with the option to pay any amount they choose (equal to or more than the minimum required repayment but less than the full outstanding balance) on a regular basis, when making automated repayments.

[Note: paragraph 6.5 of ILG]

A firm must not increase, nor offer to increase, a5 customer's credit limit on a credit card or retail revolving credit agreement5 where:

1. (1)

   the firm has been advised that the customer does not wish to have any credit limit increases; or

2. (2)

   a customer is at risk of financial difficulties.

   [Note: paragraphs 6.6 and 6.7 of ILG]

A firm under a retail revolving credit agreement, or5 a regulated credit agreement for a credit card,5 must:

1. (1)

   permit a customer at any time to reduce or decline offers to increase the credit limit; and

2. (2)

   permit a customer to decline to receive offers of credit limit increases.

   [Note: paragraphs 6.8 and 6.9 of ILG]

1. (1)

   This rule applies to a regulated credit agreement for a credit card and to a retail revolving credit agreement.5

2. (2)

   A firm must notify the customer of a proposed increase in the credit limit under the agreement:5

   1. (a)

      in the case of a regulated credit agreement for a credit card or a store card, at least 30 days before the increase comes into effect; and5

   2. (b)

      in the case of a retail revolving credit agreement (other than an agreement for a store card), at least 28 days before the increase comes into effect,5

   except in the circumstances described in (3).5

3. (3)

   The notification in (2) is not required where:5

   1. (a)

      the increase is at the express request of the customer; or5

   2. (b)

      the increase is proposed by the firm, but the customer agrees to it at that time and wishes it to come into effect in less than 30 days or 28 days (as the case may be).5

[Note: paragraph 6.17 of ILG]

Where a customer is at risk of financial difficulties, a firm under a retail revolving credit agreement or a5 regulated credit agreement for a credit card 5must, other than where a promotional rate of interest ends, not increase the rate of interest under the agreement.

[Note: paragraph 6.10 of ILG]

Where a firm proposes to exercise a power under a regulated credit agreement for a credit card or store card to increase the interest rate, the firm must:

1. (1)

   permit the customer sixty days, from the date of the firm's notice of the proposed increase during which period the customer may give notice to the firm requiring it to close the account;

2. (2)

   permit the customer to pay off the outstanding balance at the rate of interest before the proposed increase and over a reasonable period; and

3. (3)

   give notice to the customer of the rights in (1) and (2).

   [Note: paragraphs 6.11 and 6.19 of ILG]

Where a firm has a right to increase the interest rate under a regulated credit agreement, the firm must not increase the interest rate unless there is a valid reason for doing so.

[Note: paragraph 6.20 of ILG]

Where a firm increases a rate of interest based on a change in the risk presented by the customer, the firm must:

1. (1)

   notify the customer that the rate of interest has been increased based on a change in risk presented by the customer; and

2. (2)

   if requested by the customer provide a suitable explanation which may be a generic explanation for such increases.

   [Note: paragraph 6.20 (box) of ILG]

1. (1)

   5This rule applies only to retail revolving credit 8 and BNPL agreements to which Part 6 of the Payment Services Regulations does not apply.

2. (2)

   Where a customer has the benefit of a zero-percentage or low interest, introductory or promotional offer that depends on the customer meeting certain conditions, a firm must provide notice to the customer reminding them of any action they need to take to meet the conditions of the offer and the date by which this action must be taken, within a reasonable period before that date, taking account of the time at which the information may be most useful to the customer.

   This notice must be provided in an appropriate medium (taking into account any preferences expressed by the customer about the medium of communication between the firm and the customer), in plain language and sufficiently prominent, so that it is likely to be seen and understood by the customer.

1. (1)

   8This rule applies where:

   1. (a)

      BNPL credit has been advanced to a customer under a BNPL agreement; and

   2. (b)

      the customer makes a repayment:

      1. (i)

         of part of the BNPL credit;

      2. (ii)

         on or before the date provided for in the BNPL payment condition that applies to that BNPL credit.

2. (2)

   The BNPL agreement must have the effect that, in respect of so much of the BNPL credit as has been repaid, the customer is liable to pay no more than the customer would have been liable to pay if the BNPL credit had been repaid in full on or before the date provided for in the BNPL payment condition.

1. (1)

   In CONC 6.7.18 R to CONC 6.7.23 R “refinance” means to extend, or purport to extend, the period over which one or more repayment is to be made by a customer whether by:

   1. (a)

      agreeing with the customer to replace, vary or supplement an existing regulated credit agreement;

   2. (b)

      exercising a contractual power contained in an existing regulated credit agreement; or

   3. (c)

      other means, for example, granting an indulgence or waiver to the customer.

2. (2)

   “Exercise forbearance” means to refinance a regulated credit agreement where the result is that no interest accrues at any time in relation to that agreement or any which replaces, varies or supplements it from the date of the refinancing and either:

   1. (a)

      there is no charge in connection with the refinancing; or

   2. (b)

      the only additional charge is a reasonable estimate of the actual and necessary cost of the additional administration required in connection with the refinancing.

3. (3)

   The term “refinance” within paragraph (1) does not include where under a regulated credit agreement repayable in instalments a customer requests a change in the regular payment date and as a result there is no charge or additional interest in connection with the change.

4. (4)

   For the purpose of CONC 6.7.18R, CONC 6.7.19R, CONC 6.7.21G and CONC 6.7.23R, the10 term “refinance” within paragraph (1) does not include where a firm extends, or purports to extend, the period over which one or more repayment is to be made by a customer in circumstances where the firm does this in order to follow the guidance entitled Credit cards (including retail revolving credit) and coronavirus: updated 12temporary guidance for firms,10 the guidance entitled Personal loans and coronavirus: updated 12temporary guidance for firms, the guidance entitled Motor finance agreements and coronavirus: updated13 temporary guidance for firms, the guidance entitled High-cost short-term credit and coronavirus: updated13 temporary guidance for firms, 11 the guidance entitled Rent-to-own, buy-now-pay-later and pawnbroking agreements and coronavirus: updated13 temporary guidance for firms or the guidance entitled Coronavirus and customers in temporary financial difficulty: updated14 guidance for insurance and premium finance firms11.9

   10

A firm must not encourage a customer to refinance a regulated credit agreement if the result would be the customer's commitments are not sustainable.

[Note: paragraph 4.27 of ILG]

A firm must not refinance a customer's existing credit with the firm (other than by exercising forbearance), unless:

1. (1)

   the firm does so at the customer's request or with the customer's consent; and

2. (2)

   the firm reasonably believes that it is not against the customer's best interests to do so.

   [Note: paragraph 6.24 of ILG]

Before a firm agrees to refinance high-cost short-term credit, it must:

1. (1)

   give or send an information sheet to the customer; and

2. (2)

   where reasonably practicable to do so, bring the sheet to the attention of the customer before the refinance;

in the form of the arrears information sheet issued by the FCA referred to in section 86A of the CCA with the following modifications:

1. (3)

   for the title and first sentence of the information sheet substitute:

   “High-cost short-term loans

   Failing to repay on time

   Think carefully - rolling over or extending your loan may not be the best option and may make things worse.”; and

2. (4)

   for the bullet points substitute: “

   •Think carefully before borrowing more. Borrowing more money is likely to worsen your situation.

   •Work out how much you owe. To do this, you will need to make a list of all the organisations you owe money to. A debt adviser can help you

   •Put priority debts first. Some debts are more urgent than others because the consequences of not paying them can be more serious than for other debts, for example, mortgage, rent, council tax/ rates, or gas or electricity arrears. A debt adviser can help you to budget to keep your finances under control

   Discuss options with your lender

   •If you are having trouble paying back on time talk to your lender who can suggest ways to repay and make sure it is affordable for you.

   •If you don’t, you may quickly face increased costs from interest or charges. Missed payments could affect your credit rating and make it more difficult to get credit in future.

   Get free help and advice

   •People that access advice resolve their issues more quickly than those that don’t and hundreds of thousands get free debt advice every year.

   •Contact one of these organisations for free debt advice.”

3. (5)

   in relation to an arrears sheet to be used by an operator of an electronic system in relation to lending:

   1. (a)

      for the bullet point headed “Work out how much money you owe” substitute:

      “Work out how much money you owe. To do this, you will need to make a list of all those you owe money to. A debt adviser can help you.”;

   2. (b)

      for the title “ Discuss options with your lender” substitute

      “Discuss options with your peer to peer lending platform (P2P platform)”;

   3. (c)

      for the bullet point which begins “If you are having trouble ?” substitute

      “If you are having trouble paying back on time talk to your P2P platform who can suggest ways to repay and make sure it is affordable for you.”.

      [Note: Until the end of 30 June 2014, transitional provisions apply to CONC 6.7.20 R: see CONC TP 32]

A firm must not refinance high-cost short-term credit (other than by exercising forbearance) on more than two occasions.

[Note: Until the end of 30 June 2014, transitional provisions apply to CONC 6.7.23 R: see CONC TP 3.3]

A firm must not amend the terms of a continuous payment authority without first obtaining the customer's consent, after having fully explained to the customer the reason for the amendment.

[Note: paragraph 3.9miii of DCG]

CONC 6.7.24 R does not preclude the firm from:

1. (1)

   making amendments pursuant to a variation clause to which the customer has previously given consent, after it was fully explained to the customer the reason for the amendment; or

2. (2)

   reducing or waiving payments unilaterally, for example, under a repayment plan, provided that this is explained to the customer.

   [Note: paragraph 3.9miii of DCG]

1. (1)

   2Paragraph (2) applies if an individual other than the borrower (in this rule referred to as “the guarantor”) has:

   1. (a)

      provided a guarantee or an indemnity (or both) in relation to:

      1. (i)

         a regulated credit agreement; or

      2. (ii)

         a P2P agreement in respect of which the borrower is an individual; and

   2. (b)

      granted a continuous payment authority.

2. (2)

   CONC 6.7.24R and CONC 6.7.25R apply in respect of the guarantor as if references to the customer were references to the guarantor.

3. (3)

   For the purposes of this rule, a guarantee does not include a legal or equitable mortgage or a pledge.

A firm must use the correct category code and identifier when presenting a payment request to the payment service provider.

[Note: paragraph 3.9miii of DCG]

9CONC 6.7.27R to 6.7.40G do not apply to a firm in respect of a customer, who the firm has allowed to defer (in whole or part) the making of repayments under a regulated credit agreement for a credit card or retail revolving credit in the circumstances and for the duration set out in the guidance entitled Credit cards (including retail revolving credit) and coronavirus: temporary guidance for firms or the guidance entitled Credit cards (including retail revolving credit) and coronavirus: updated temporary guidance for firms12, for the period of the deferment.

1. (1)

   7This rule applies to a firm with respect to communicating with a customer about, and receiving payments or exercising rights under, a regulated credit agreement for a credit card or retail revolving credit,5 if the firm assesses that the amount the customer has paid to the firm towards the credit card balance or retail revolving credit balance5 over the immediately preceding 18-5month period comprises a lower amount in principal than in interest, fees and charges.

2. (2)

   A firm must assess whether the condition in paragraph (1) is met at least once a month.

3. (3)

   The rule in paragraph (1) does not apply:

   1. (a)

      where the balance on the credit card or under the retail revolving credit agreement5 was below £200 at any point in the 18-5month period; or

   2. (b)

      where the firm has sent a communication to the customer in accordance with paragraph (4) in the preceding 18 months in relation to the credit card or retail revolving credit facility5; or

   3. (c)

      where the firm is taking steps to treat the customer with forbearance under CONC 6.7.37R, is otherwise taking equivalent or more favourable steps in relation to the customer’s account, or CONC 6.7.39R applies.

4. (4)

   Where the rule in paragraph (1) applies in relation to a credit card credit card customer or a retail revolving credit customer5, a firm must, in an appropriate medium (taking into account any preferences expressed by the customer about the medium of communication between the firm and the customer) and in plain language:

   1. (a)

      notify the customer that, in the preceding 18 months, the amount the customer paid comprised a lower amount in principal than in interest, fees and charges;

   2. (b)

      explain that increasing this level of payment would reduce the cost of borrowing and the amount of time it would take to repay the balance;

   3. (c)

      encourage the customer to contact the firm to discuss the customer’s financial circumstances and whether the customer can increase the amount of payments without an adverse effect on the customer’s financial situation;

   4. (d)

      warn the customer of the potential implications if the customer’s payments comprise a lower amount in principal than in interest, fees and charges in two consecutive 18-month periods; and

   5. (e)

      provide contact details for not-for-profit debt advice bodies and encourage the customer to contact one of them.

1. (1)

   7This rule applies in respect of a credit card customer or a retail revolving credit customer5 to whom a firm is required to have sent a communication under CONC 6.7.27R(4).

2. (2)

   The steps required under paragraphs (3) and (4) must be taken:

   1. (a)

      no earlier than nine months after; and

   2. (b)

      no later than 10 months after,

   the date on which the requirement to send a communication under CONC 6.7.27R arose.

3. (3)

   The firm must:

   1. (a)

      consider the pattern of payments made by the customer over the period beginning on the date on which the requirement to send a communication under CONC 6.7.27R(1) arose and ending on the date the firm takes steps under paragraph (2); and

   2. (b)

      assume that this will be representative of the customer’s payment pattern in the entire 18-month period immediately following the date on which the requirement to send a communication under CONC 6.7.27R(1) arose.

4. (4)

   If the analysis in (3) indicates that it is likely that CONC 6.7.30R will apply with respect to the customer, the firm must repeat the steps required under CONC 6.7.27R(4).

5. (5)

   The rule in paragraph (1) does not apply where the firm is already taking steps equivalent to, or more favourable than, those required under CONC 6.7.37R.

1. (1)

   7This rule applies:

   1. (a)

      in respect of a credit card customer or a retail revolving credit customer5 to whom a firm is required to have sent a communication under CONC 6.7.27R (1); and

   2. (b)

      where the amount that the customer has paid to the firm towards the credit card or retail revolving credit5 balance, over the 18-month period immediately following the date on which the requirement to send a communication under CONC 6.7.27R(1) arose, comprises a lower amount in principal than in interest, fees and charges.

2. (2)

   This rule does not apply:

   1. (a)

      where the balance on the credit card or retail revolving credit5 was below £200 at any point in the 18-month period;

   2. (b)

      to any part of the balance on the credit card or retail revolving credit5 that has previously been subject to the requirements of paragraph (3).

3. (3)

   A firm must take reasonable steps to assist a credit card customer who falls under paragraph (1) to repay the balance on their credit card or retail revolving credit5 as it stands at the end of the period specified in that paragraph more quickly and in a way that does not adversely affect the customer’s financial situation.

4. (4)

   The firm is not required to take steps under (3) or CONC 6.7.31R where the firm is already taking steps equivalent to, or more favourable than, those required under CONC 6.7.37R, provided that the firm continues to take those steps.

7Where a firm is required to assist a customer to repay more quickly under CONC 6.7.30R(3), the5 firm must contact the customer to:

1. (1)

   explain that increasing this level of payment would reduce the cost of borrowing and the amount of time it would take to repay the balance;

2. (2)

   provide contact details for not-for-profit debt advice bodies and encourage the customer to contact one of them;

3. (3)

   set out options for the customer to increase payments and request that the customer, within a specified reasonable period, respond to either:

   1. (a)

      confirm that the customer will increase payments in accordance with one of the options; or

   2. (b)

      where applicable, confirm that the options proposed are not sustainable for the customer; and

4. (4)

   inform the customer that if the firm does not receive a response to the request under paragraph (3) in the time specified, the firm will suspend or cancel the use of the credit card or retail revolving credit facility5.

1. (1)

   7Where a customer does not respond to a firm’s request under CONC 6.7.31R(3), a firm must, at the end of the period specified in the request, suspend or cancel the customer’s use of the credit card or retail revolving credit facility5.

2. (2)

   Where a customer confirms that one or more of the options proposed under CONC 6.7.31 R(3) is sustainable, but states that they will not make the increased payments, a firm must suspend or cancel the customer’s use of the credit card or retail revolving credit facility5.

3. (3)

   Where a firm suspends the customer’s use of the credit card or retail revolving credit facility5 under paragraph (1) and the customer subsequently responds to the firm’s request under CONC 6.7.31R(3), the firm may withdraw the suspension if this would be in line with the other provisions in this section.

7Where a customer:

1. (1)

   confirms to the firm that the options set out under CONC 6.7.31R(3) are unsustainable; or

2. (2)

   informs the firm that they will increase payments in accordance with one of the options proposed under CONC 6.7.31G(3) but the patterns of payments actually made under the repayment plan after it is put in place, or other indicators, show that the customer is unlikely to repay the balance in a reasonable period,

the firm must treat the customer with forbearance and due consideration.

7Where a firm does not suspend or cancel the use of the credit card or retail revolving credit facility5 of a customer falling under CONC 6.7.30R, the firm must take reasonable steps to ensure that the customer does not, in the 18-month period immediately following, repay an amount to the firm towards the credit card or retail revolving credit5 balance that comprises a lower amount in principal than in interest, fees and charges in relation to any spending on the card in this period.

46A firm must provide an easy, efficient and prompt process by which a borrower under an authorised non-business overdraft agreement may request:

1. (1)

   a reduction in the credit limit under that agreement; or

2. (2)

   to terminate the authorised non-business overdraft agreement but retain the current account that it is associated with, where the terms of the agreement permit this.