CONC 8.6 Changes to contractual payments
- (1)
Where a firm gives advice to a customer not to make a contractual repayment or to cancel any means of making such a repayment before any debt solution is agreed or entered into, the firm must be able to demonstrate the advice is in the customer's best interests.
- (2)
Where a firm gives advice of the type in (1), the firm must advise the customer (C) that if C adopts the advice C should notify C's lenders without delay and explain that C is following the firm's advice to this effect.
[Note: paragraph 3.27 of DMG]
If the effect of advice the firm gives (if adopted by the customer) is that contractual repayments are not made or are not made in full (for one or more repayments), the firm must warn the customer of the actual or potential consequences of taking that course of action.
[Note: paragraph 3.28a of DMG]
A firm must only advise a customer to make repayments at a rate lower than the rate necessary to meet interest and charges accruing where it is in the customer's best interests.
[Note: paragraph 3.28b of DMG]
- (1)
The FCA expects it will generally be in the customer's best interests to maintain regular payments to lenders (even if the repayment is less than the full sum due).
- (2)
An example where it might be in the customer's best interests not to repay at the rate necessary to meet interest and charges accruing is where there is insufficient disposable income to meet essential expenditure of the type referred to in CONC 8.5.3 G. Where that is the case, the firm should explain clearly to the customer why this course of action is necessary and the consequences of the course of action.
Where a firm has advised a customer not to make contractual repayments (in full or in part) or to cancel the means of making such payments or not to make repayments necessary to meet interest and charges accruing, the firm must advise the customer if it becomes clear that that course of action is not producing effects in the customer's best interests to enable the customer to take action in the customer's best interests.
Note: paragraph 3.28c of DMG]
- (1)
An example of an effect not in the customer's best interests would be if a lender does not agree to stop applying interest and charges to the customer's debt.
[Note: paragraph 3.28c of DMG]
- (2)
Where it becomes clear that the course of action in CONC 8.6.5 R is not producing effects in the customer's best interests the firm should, where withdrawing from the debt management plan may be in the customer's best interests, advise the customer of the possibility of withdrawing from the plan.