1This chapter applies, unless otherwise stated in a rule, or in relation to a rule, to a firm with respect to consumer credit lending.

1. (1)

   Before significantly increasing:

   1. (a)

      the amount of credit to be provided under a regulated credit agreement; or

   2. (b)

      a credit limit for running-account credit under a regulated credit agreement;

   the lender must undertake an assessment of the customer's creditworthiness.

   [Note: section 55B(2) of CCA]

2. (2)

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

   1. (a)

      the potential for the commitments under the regulated credit agreement to adversely impact the customer's financial situation, taking into account the information of which the firm is aware at the time that the increase in (1) is to be granted; and

   2. (b)

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

      [Note: paragraphs 4.1 and 4.3 of ILG]

3. (3)

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

   1. (a)

      the customer, where appropriate, and

   2. (b)

      a credit reference agency, where necessary.

4. (4)

   This rule does not apply to:

   1. (a)

      an agreement secured on land; or

   2. (b)

      an agreement under which a person takes an article in pawn.

5. (5)

   This rule does not apply, except to the agreements in (6), to:

   1. (a)

      a non-commercial agreement;

   2. (b)

      a borrower-lender agreement enabling the borrower to overdraw on a current account;

   3. (c)

      a small borrower-lender-supplier agreement for restricted-use credit.1

6. (6)

   The agreements referred to in (5) and therefore to which this rule does apply are:

   1. (a)

      a borrower-lender agreement enabling the borrower to overdraw on a current account which is an authorised business overdraft agreement or an authorised non-business overdraft agreement; or

      [Note: section 74(1B)/(1C) of CCA]

   2. (b)

      a borrower-lender agreement enabling the borrower to overdraw on a current account which would be an authorised non-business overdraft agreement but for the fact that the credit is not repayable on demand within three months.

      [Note: section 74(1D) of CCA].

1. (1)

   2This rule applies if, in relation to a regulated credit agreement:

   1. (a)

      an individual other than the borrower (in this rule referred to as “the guarantor”) has provided a guarantee or an indemnity (or both); and

   2. (b)

      the lender is required to undertake an assessment of the customer under CONC 6.2.1R.

2. (2)

   Before doing either of the things mentioned in (1), the lender must undertake an assessment of the potential for the guarantor’s commitments in respect of the regulated credit agreement to adversely impact the guarantor’s financial situation.

3. (3)

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

Where CONC 6.2.1 R or CONC 6.2.1AR2 applies to a firm:

[Note: paragraph 4.2 of ILG]

1. (1)

   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

2. (2)

   the rules in CONC 5.3 referred to in (1) apply with the modifications necessary to take into account that CONC 6.2.1 R concerns increases in the amount of credit and in credit limits and when the increase is to take place;2

3. (3)

   the guidance in CONC 5.3 applies accordingly and CONC 5.2.3 G and CONC 5.3.4 R apply treating them as guidance on CONC 6.2.1 R or, as the case may be, on CONC 6.2.1AR; and2

4. (4)

   for the purposes of CONC 6.2.1AR, the rules specified in (1), as modified by (2), and the guidance specified in (3) apply as if references to the customer were references to the guarantor.2

A firm must consider sufficient information available to it at the time of the increase referred to in CONC 6.2.1 R to enable it to make a reasonable assessment required by that rule or CONC 6.2.1AR. The provision of the guarantee or indemnity (or both), and the assessment of the guarantor, does not remove or reduce the obligation on the firm to carry out an assessment of the borrower under CONC 6.2.1R. Firms are reminded of the rule in CONC 5.3.4R that the assessment of the borrower must not be based primarily or solely on the value of any security provided by the borrower.2

[Note: paragraph 4.21 of ILG]

This section applies:

1. (1)

   to a firm with respect to consumer credit lending; and

2. (2)

   where a firm has entered into a current account agreement where:

   1. (a)

      there is a possibility that the account-holder may be allowed to overdraw on the current account without a pre-arranged overdraft or exceed a pre-arranged overdraft limit; and

   2. (b)

      if the account-holder did so, this would be a regulated credit agreement.

CONC 6.3.3 R does not apply where the overdraft or excess would be secured on land.

A firm must provide to the account-holder, in writing, the information in CONC 4.7.2R (2) at least annually.

[Note: section 74A of CCA (partial implementation of article 18 of the Consumer Credit Directive)]

1. (1)

   A firm must inform the account-holder in writing of the matters in (2) without delay where:

   1. (a)

      the account-holder overdraws on the current account without a pre-arranged overdraft, or exceeds a pre-arranged overdraft limit, for a period exceeding one month;

   2. (b)

      the amount of that overdraft or excess is significant throughout that period;

   3. (c)

      the overdraft or excess is a regulated credit agreement; and

   4. (d)

      the account-holder has not been informed in writing of the matters in (2) within that period.

2. (2)

   The matters in (1) are:

   1. (a)

      the fact that the account is overdrawn or the overdraft limit has been exceeded;

   2. (b)

      the amount of that overdraft or excess;

   3. (c)

      the rate of interest charged on it; and

   4. (d)

      any other charges payable by the customer in relation to it (including any penalties and any interest on those charges).

3. (3)

   For the purposes of (1)(b) the amount of the overdraft or excess is significant if:

   1. (a)

      the account-holder is liable to pay a charge for which he would not otherwise be liable; or

   2. (b)

      the overdraft or excess is likely to have an adverse effect on the customer's ability to receive further credit (including any effect on the information about the customer held by a credit reference agency); or

   3. (c)

      it otherwise appears significant, having regard to all the circumstances.

4. (4)

   Where the overdraft or excess is secured on land, (1)(a) is to be read as if the reference to one month were a reference to three months.

[Note: section 74B of CCA]

[Note: article 18 of the Consumer Credit Directive]

This section applies to

1. (1)

   a firm with respect to consumer credit lending;

2. (2)

   a firm with respect to consumer hiring.

1. (1)

   Where a firm is entitled to payments from the same customer in respect of two or more regulated agreements, the firm must allow the customer, on making any payment in respect of those agreements which is not sufficient to discharge the total amount then due under all the agreements, to appropriate the sum paid by him:

   1. (a)

      in or towards the satisfaction of the sum due under any one of the agreements; or

   2. (b)

      in or towards the satisfaction of the sums due under any two or more of the agreements in such proportions as the customer thinks fit.

      [Note: section 81(1) of CCA]

2. (2)

   If the customer fails to make any such appropriation where one or more of the agreements is:

   1. (a)

      a hire-purchase agreement or conditional sale agreement; or

   2. (b)

      a consumer hire agreement; or

   3. (c)

      an agreement in relation to which any security is provided;

   the firm must appropriate the payment towards satisfaction of the sums due under the agreements in the proportions which those sums bear to one another.

   [Note: section 81(2) of CCA]

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

1. (1)

   Where rights of a lender under a regulated credit agreement are assigned to a firm, that firm must arrange for notice of the assignment to be given to the customer:

   1. (a)

      as soon as reasonably possible; or

   2. (b)

      if, after the assignment, the arrangements for servicing the credit under the agreement do not change as far as the customer is concerned, on or before the first occasion they do.

      [Note: section 82A of CCA]

2. (2)

   Paragraph (1) does not apply to an agreement secured on land.

3. (3)

   A firm may assign the rights of a lender under a regulated credit agreement to a third party only if:

   1. (a)

      the third party is a firm; or

   2. (b)

      where the third party does not require authorisation, the firm has an agreement with the third party which requires the third party to arrange for a notice of assignment in accordance with (1).

   [Note: article 17 of the Consumer Credit Directive]

This section applies to:

1. (1)

   a firm with respect to consumer credit lending;

2. (2)

   a firm with respect to consumer hiring.

A firm which takes any article in pawn under a regulated credit agreement must keep such books or other records as are sufficient to show and explain readily at any time all dealings with the article, including:

1. (1)

   the taking of the article in pawn;

2. (2)

   any redemption of the article; and

3. (3)

   where the article has become realisable by the firm, any sale of the article under section 121(1) of the CCA.

   [Note: regulation 2(1) of SI 1983/1565]

Without prejudice to the generality of CONC 6.6.3 R, the entries in the books or other records in respect of the dealings mentioned in CONC 6.6.3 R (1) to CONC 6.6.3 R (3) must contain the information in CONC 6.6.7 R to CONC 6.6.9 R.

[Note: regulation 2(2) of SI 1983/1565]

Where the entries in relation to any article taken in pawn in CONC 6.6.4 R are not shown together as a whole but are shown in separate places, then in each place where entries are made the record must show:

1. (1)

   the date and the number or other reference of the agreement under which the article was taken in pawn and, where separate from any document embodying the agreement, the number or other reference of the pawn-receipt;

2. (2)

   the date on which the article was taken in pawn; and

3. (3)

   the name of the customer.

   [Note: regulation 2(3) of SI 1983/1565]

A firm must retain the books or other records required by CONC 6.6.3 R at least until the expiration of whichever is the longer of the following periods:

1. (1)

   five years from the date on which the article was taken in pawn; or

2. (2)

   where an article has become realisable by the firm, three years from the date of sale under section 121(1) of the CCA or the redemption of the article, as the case may be.

   [Note: regulation 2(4) of SI 1983/1565]

The entries in the books or other records, in relation to the taking of the article in pawn, must contain the following information:

1. (1)

   the date and the number or other reference of the agreement under which the article was taken in pawn, and of the pawn-receipt if separate, sufficient to identify it or them;

2. (2)

   the date on which the article was taken in pawn;

3. (3)

   the name and a postal address and, where appropriate, other address of the customer;

4. (4)

   the description that appears in the pawn-receipt of the article taken in pawn;

5. (5)

   the amount of the credit secured by the pledge;

6. (6)

   the date of the end of the redemption period; and

7. (7)

   the rate of interest, and the amount or rate of any other charges for credit, as provided for in the agreement under which the article was take in pawn.

   [Note: paragraph 1 of Schedule to SI 1983/1565]

The entries in the books or other records in relation to any redemption of the article must contain the date of the redemption.

[Note: paragraph 2 of Schedule to SI 1983/1565]

The entries in the books or other records, where the article has become realisable by the firm, in relation to any sale of the article under section 121(1) of the CCA, must contain the following information:

1. (1)

   the date of the sale;

2. (2)

   where the article was sold by auction, the name and a postal address of the auctioneer;

3. (3)

   where the article was not sold by auction, the postal address of the premises at which the sale took place;

4. (4)

   the gross amount realised;

5. (5)

   the itemised expenses, if any, of the sale;

6. (6)

   where (5) applies, the net proceeds of sale, being the difference between the gross amount in (4) and the total amount of the expenses in (5);

7. (7)

   the amount which would have been payable under the agreement under which the article was taken in pawn if the article had been redeemed on the date of the sale;

8. (8)

   where the net proceeds of sale are not less than the sum which, if the article taken in pawn had been redeemed on the date of the sale, would have been payable for its redemption, the amount of any surplus payable to the customer;

9. (9)

   where (8) does not apply, the amount by which the net proceeds of sale fall short of the sum which would have been payable for the redemption of the article taken in pawn on the date of the sale, being the amount for which the customer remains liable under section 121(4) of the CCA;

10. (10)

    the date on which any surplus in (8) was paid to the customer;

11. (11)

    the date on which any amount in (9) for which the customer remained liable under section 121(4) of the CCA was received from the customer.

    [Note: paragraph 3 to Schedule to SI 1983/1565]

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.

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

[Note: paragraph 6.2 of ILG]

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)

   A 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.

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, the customer'scredit limit on a credit card or store card 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 regulated credit agreement for a credit card or a store card 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]

A firm under a regulated credit agreement for a credit card or store card must notify the customer of a proposed increase in the credit limit under the agreement at least 30 days before the increase comes into effect, except where: 1

[Note: paragraph 6.17 of ILG]

1. (1)

   the increase is at the express request of the customer: or1

   1
2. (2)

   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.1

   1

Where a customer is at risk of financial difficulties, a firm under a regulated credit agreement for a credit card or a store card must, 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)

   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.

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]

This section applies to a firm with respect to credit broking.

Where section 155 of the CCA applies, a firm must respond promptly4 to a request for a refund; this includes making payment of the refund promptly if a refund is payable4.

[Note: paragraph 6.17 of CBG]

3If a customer has not entered into an agreement referred to in section 155(2) of the CCA within six months of the customer being introduced by the firm to a potential source of credit or of bailment (or in Scotland of hire), or 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)5, as soon as reasonably practicable after the expiry of that six-month period a firm must by any method clearly bring to the customer's attention:

1. (1)

   the right to request a refund under section 155 of the CCA; and

2. (2)

   how to exercise the right to request the refund.

[Note: paragraph 6.19d of CBG]