CONC 6.8 Post contract business practices: credit brokers

Where a firm takes on responsibility for giving information to a customer or receiving information from a customer in accordance with provisions of the CCA (for example, supplying a copy of an executed regulated credit agreement under section 61A of the CCA) the firm should ensure it is familiar with the relevant statutory requirements and has adequate system and procedures in place to comply with the provision in question.

1. (1)

   Under section 155 of the CCA an individual has a right to a refund of the firm's fee (less £5) (or for that fee not to be payable) where the individual has not entered into an agreement to which section 155 applies within six months of an introduction:5

   1. (a)

      to a source of credit or of bailment (or in Scotland of hire); or5

   2. (b)

      to another firm that carries on credit broking of the kind specified in article 36A(1)(a) to (c) of the RAO disregarding the effect of paragraph (2) of that article (that is, the effecting of an introduction to a lender or an owner, or to another person who effects such introductions by way of business).5

   [Note: paragraph 6.1 of CBG]

2. (2)

   It is immaterial for the purposes of section 155 of the CCA why no agreement has been entered into (for example, an individual should be entitled to a refund where the individual decides for any reason not to enter into an agreement within the relevant time period).

   [Note: paragraph 6.2 of CBG]

3. (3)

   Section 155 does not apply where the introduction is for a regulated mortgage contract or a home purchase plan and the person charging the fee is an authorised person or an appointed representative. Arranging and advising in relation to regulated mortgages contracts and 1 home purchase plans are regulated activities under the Regulated Activities Order and carrying on those activities would require permissions covering those activities.

   [Note: paragraph 6.4 of CBG]

4. (4)

   In relation to a credit agreement the refund would apply to any sum which is an amount that is or would enter in to the total charge for credit paid or payable to or via the credit broker whether or not the firm describes it as a fee or commission.

   [Note: paragraphs 6.11 and 6.13 of CBG]

5. (5)

   Where an individual withdraws from a regulated credit agreement under section 66A of the CCA or cancels a cancellable agreement (see section 67 of the CCA) under section 69 of the CCA the agreement is treated as never have been entered into and hence the period referred to in section 155 continues to apply in these circumstances.

   [Note: paragraph 6.10 of CBG]

3The FCA would consider it to be reasonably practicable to comply with CONC 6.8.4A R within five working days of the expiry of the six-month period.

1. (1)

   An individual does not need to refer to the right under section 155 of the CCA in order to be entitled to a refund.

2. (2)

   A firm should respond promptly to a request for a refund. Firms are reminded of the rule in CONC 11.1.12R to return sums without undue delay, and within 30 calendar days, on cancellation of a distance contract.4

3. (3)

   In circumstances where individuals request refunds and the firm knows, or ought to know, that agreements to which section 155 applies would not be entered into within six months, the firm should not make the individuals wait for the six month2 period to elapse before making the refund.

   [Note: paragraphs 6.17 and 6.18 of CBG]

   2