1. (1)

   For the purposes of this section, references to the period for which credit is provided:

   1. (a)

      in the case of a credit agreement under which the period for which credit is to be provided is ascertainable at the date of the making of the credit agreement, are references to the period beginning with the relevant date and ending with the end of the period for which credit is to be provided;

   2. (b)

      in the case of a credit agreement under which the period for which credit is to be provided can be ascertained at the relevant date if the assumption in CONC App 1.1.12 R is applied, are references to the period beginning with the relevant date and ending with the end of the period for which credit would be provided under the credit agreement if the amount given by that assumption were the amount of the credit so provided; and

   3. (c)

      in any other case, are references to the period of one year referred to in CONC App 1.1.13 R.

2. (2)

   References in this section to repayment of the credit under a credit agreement and of the total charge for credit include references to any repayment or payment, as the case may require, of any part of the credit and of the total charge for credit.

This section applies to regulated credit agreements which are secured on land or to prospective regulated credit agreements which are to be secured on land, except to the extent that the Consumer Credit (Disclosure of Information) Regulations 2010 apply to such agreements.

1. (1)

   Any calculation under this section shall be made on the following assumptions

   1. (a)

      the assumption that the borrower will not be entitled to any income tax relief relating to the transaction other than relief under section 19 of the Income and Corporation Taxes Act 1970 and Schedule 4 to the Finance Act 1976 (which afford relief in respect of premiums under certain policies of insurance) without any deduction under section 21 of the said Act of 1970;

   2. (b)

      the assumption that no assistance is given under the Home Purchase Assistance and Housing Corporation Guarantee Act 1978;

   3. (c)
      1. (i)

         in the case of a transaction which provides for repayment of the credit or of the total charge for credit at, or not later than, a specified time or times, the assumption that the lender will not exercise any right under the transaction to require repayment at any other time or times;

      2. (ii)

         in any other case, the assumption that the lender will not exercise any right under the transaction to require repayment;

      the borrower, in any case, performing all his obligations under the transaction;

   4. (d)

      subject to (e) below, in the case of a transaction which provides for variation of the rate or amount of any item included in the total charge for credit in consequence of the occurrence after the relevant date of any event, the assumption that the event will not occur; and, in this sub-paragraph, “event” means an act or omission of the borrower or of the lender or any other event (including where the transaction makes provision for variation upon the continuation of any circumstance, the continuation of that circumstance) but does not include an event which is certain to occur and of which the date of occurrence, or the earliest date of occurrence, can be ascertained at the date of the making of the credit agreement; and

   5. (e)

      in the case of a land-related agreement which provides for the possibility of any variation of the rate of interest in consequence of the occurrence after the relevant date of any event (being an event which is certain to occur and of which the date of occurrence, or the earliest date of occurrence, can be ascertained at the date of the making of the credit agreement), the assumption that such a variation will, when the event occurs, take place.

2. (2)

   For the purposes of this section

   1. (a)

      subject to (b) below and CONC App 1.1.18 R, in the case of any credit agreement each provision of credit and each repayment of the credit and of the total charge for credit shall be taken to be made:

      1. (i)

         at the earliest time provided under the transaction, and

      2. (ii)

         in a case where any such provision or repayment is to be made at or not later than a specified time, at that time

      and, where any such repayment is to be made before the relevant date, it shall be taken to be made on the relevant date;

   2. (b)

      where under a credit agreement for running-account credit or a credit agreement for fixed-sum credit where the credit is not repayable at specified intervals or in specified amounts a constant period rate of charge in respect of periods of equal or of nearly equal length is charged, it shall be assumed for the purposes of calculations under this section, notwithstanding CONC App 1.1.17 R, that

      1. (i)

         the amount of credit outstanding at the beginning of a period is to remain outstanding throughout the period;

      2. (ii)

         the amount of any credit provided during a period is provided immediately after the end of the period; and

      3. (iii)

         any repayment of credit or of the total charge for credit made during a period is made immediately after the end of the period; and

   3. (c)

      the assumption that the amount of any repayment of credit or of the total charge for credit will, at the time when the repayment is made, be the smallest for which the agreement provides.

3. (3)

   In determining the amount of the total of the interest on the credit which may be provided under the credit agreement, any subsidy receivable by any person under Part II of the Housing Subsidies Act 1967 shall be deducted.

For the purposes of the Regulated Activities Order, the total charge for the credit which may be provided under an actual or prospective credit agreement shall be the total of the amounts determined as at the date of the making of the credit agreement of such of the charges specified in CONC App 1.1.5 R as apply in relation to the credit agreement but excluding the amount of the charges specified in CONC App 1.1.6 R.

Except as provided in CONC App 1.1.6 R, the amounts of the following charges are included in the total charge for credit in relation to a credit agreement:

1. (a)

   the total of the interest on the credit which may be provided under the credit agreement;

2. (b)

   other charges at any time payable under the transaction by or on behalf of the borrower or a relative of his whether to the lender or any other person; and

3. (c)

   a premium under a contract of insurance, payable under the transaction by the borrower or a relative of his, where the making or maintenance of the contract of insurance is required by the lender

   1. (i)

      as a condition of making the credit agreement, and

   2. (ii)

      for the sole purpose of ensuring complete or partial repayment of the credit, and complete or partial payment to the lender of such of those charges included in the total charge for credit as are payable to him under the transaction, in the event of the death, invalidity, illness or unemployment of the borrower,

   notwithstanding that the whole or part of the charge may be repayable at any time or that the consideration therefor may include matters not within the transaction or subsisting at a time not within the duration of the credit agreement.

1. (1)

   The amounts of the following items are not included in the total charge for credit in relation to a credit agreement:

   1. (a)

      any charge payable under the transaction to the lender upon failure by the borrower or a relative of his to do or to refrain from doing anything which he is required to do or to refrain from doing, as the case may be;

   2. (b)

      any charge

      1. (i)

         which is payable by the lender to any person upon failure by the borrower or a relative of his to do or to refrain from doing anything which he is required under the transaction to do or to refrain from doing, as the case may be, and

      2. (ii)

         which the lender may under the transaction require the borrower or a relative of his to pay to him or to another person on his behalf;

   3. (c)

      any charge relating to a credit agreement which is a credit agreement to finance a transaction of a description referred to in (2)(a) or (b) of the definition of restricted-use credit agreement, being a charge which would be payable if the transaction were for cash;

   4. (d)

      any charge (other than a fee or commission charged by a credit broker) not within (c) above

      1. (i)

         of a description which relates to services or benefits incidental to the credit agreement and also to other services or benefits which may be supplied to the borrower, and

      2. (ii)

         which is payable pursuant to an obligation incurred by the borrower under arrangements effected before he applies to enter into the credit agreement, not being arrangements under which the borrower is bound to enter into any credit agreement;

   5. (e)

      subject to (2) below, any charge under arrangements for the care, maintenance or protection of any land or goods;

   6. (f)

      charges for money transmission services relating to an arrangement for a current account, being charges which vary with the use made by the borrower of the arrangement;

   7. (g)

      any charge for a guarantee other than a guarantee

      1. (i)

         which is required by the lender as a condition of making the credit agreement, and

      2. (ii)

         the purpose of which is to ensure complete or partial repayment of the credit, and complete or partial payment to the lender of such of those charges included in the total charge for credit as are payable to him under the transaction, in the event of the death, invalidity, illness or unemployment of the borrower;

   8. (h)

      charges for the transfer of funds (other than charges within (f) above) and charges for keeping an account intended to receive payments towards the repayment of the credit and the payment of interest and other charges, except where the borrower does not have reasonable freedom of choice in the matter and where such charges are abnormally high; but this sub-paragraph does not exclude from the total charge for credit charges for collection of the payments to which it refers, whether such payments are made in cash or otherwise;

   9. (i)

      a premium under a contract of insurance other than a contract of insurance referred to in CONC App 1.1.5R (c).

2. (2)

   (1) above has effect only

   1. (a)

      in the case of a charge within (e), where, in pursuance of the arrangements

      1. (i)

         the services are to be performed if, after the date of the making of the credit agreement, the condition of the land or goods becomes, or is in immediate danger of becoming, such that the land or goods cannot reasonably be enjoyed or used, and

      2. (ii)

         the charge will not accrue unless the services are performed; and

   2. (b)

      in the case of any other charge within (e)

      1. (i)

         where provision of substantially the same description as that to which the arrangements relate is available under comparable arrangements from a person who is not the lender or a supplier or a credit broker who introduced the borrower and the lender, and

      2. (ii)

         where the arrangements are made with a person chosen by the borrower, and

      3. (iii)

         if, in accordance with the transaction, the consent of the lender or of a supplier or of the credit broker who introduced the borrower and the lender is required to the making of the arrangements, where the transaction provides that such consent may not be unreasonably withheld whether because no incidental benefit will or may accrue to the lender or to the supplier or to the credit broker or on any other ground;

   and references in this sub-paragraph to the lender, a supplier and a credit broker include references to his near relative, his partner and a member of a group of which he is a member, to any person nominated by him or any such person in relation to the arrangements, and to a near relative of his partner; and “near relative” means, in relation to any person, the husband, wife, father, mother, brother, sister, son or daughter of that person and “group” means the person (including a company) having control of a company together with all the companies directly or indirectly controlled by him.

The rate of the total charge for credit in the case of an actual or prospective credit agreement shall be the annual percentage rate of charge determined in accordance with the following provisions of CONC App 1.1.8 R to CONC App 1.1.10 R and (where it has more than one decimal place) rounded to one decimal place in accordance with CONC App 1.1.8 R.

The annual percentage rate of charge referred to in CONC App 1.1.7 R shall be rounded to one decimal place as follows

1. (a)

   where the figure at the second decimal place is greater than or equal to 5, the figure at the first decimal place shall be increased by one and the decimal place (or places) following the first decimal place shall be disregarded; and

2. (b)

   where the figure at the second decimal place is less than 5, that decimal place and any decimal places following it shall be disregarded.

1. (1)

   Subject to (4) below, the annual percentage rate of charge is the rate for i which satisfies the equation set out in (2) below, expressed as a percentage.

2. (2)

   The equation referred to in (1) above is

   
3. (3)

   In (2) above, references to instalments are references to any payment made by, or on behalf of, the borrower or a relative of his which comprises

   1. (a)

      a repayment of all or part of the credit under the credit agreement;

   2. (b)

      a payment of all or part of the total charge for credit; or

   3. (c)

      both a repayment of all or part of the credit and a payment of all or part of the total charge for credit.

4. (4)

   Where more than one rate is given under (1) above, the annual percentage rate of charge is the positive rate nearest to zero or, if no positive rate is so given, the negative rate nearest to zero.

1. (1)

   This rule has effect for determining the length of any period for the purposes of calculations under CONC App 1.1.7 R to CONC App 1.1.9 R.

2. (2)

   A period which is not a whole number of calendar months or a whole number of weeks shall be counted in years and days.

3. (3)

   Subject to (4) below, a period which is a whole number of calendar months or a whole number of weeks shall be counted in calendar months or in weeks, as the case may be.

4. (4)

   Where a period is both a whole number of calendar months and a whole number of weeks and

   1. (a)

      one repayment only is to be made, the period shall be counted in calendar months, or

   2. (b)

      more than one repayment is to be made

      1. (i)

         if all such repayments are to be made at intervals from the relevant date of one or more weeks, the period shall be counted in weeks, and

      2. (ii)

         in any other case, the period shall be counted in calendar months.

5. (5)

   A period which is to be counted

   1. (a)

      in calendar months shall be taken to be of a length equal to the relevant number of twelfth parts of a year, and

   2. (b)

      in weeks, shall be taken to be of a length equal to the relevant number of fifty-second parts of a year.

6. (6)

   A day may be taken to be either

   1. (a)

      one three hundred and sixty-fifth part of a year or, if it is a leap year, one three hundred and sixty-sixth part of a year; or

   2. (b)
      

      of a year.

7. (7)

   Every day shall be taken to be a working day.

1. (1)

   The provisions of CONC App 1.1.11 R to CONC App 1.1.18 R shall have effect as the case may require for the purpose of the calculation of the total charge for credit under CONC App 1.1.4 R to CONC App 1.1.6 R above and of the rate of such charge under CONC App 1.1.7 R to CONC App 1.1.10 R above in relation to any actual or prospective credit agreement in respect of matters necessary for the calculation which cannot be ascertained by the lender at the date of the making of the credit agreement.

2. (2)

   In a case where apart from this paragraph CONC App 1.1.12 R and one or more other provisions of CONC App 1.1.11 R to CONC App 1.1.18 R would fall to be applied, the said CONC App 1.1.12 R shall be applied first.

Where the amount of the credit to be provided under the credit agreement cannot be ascertained at the date of the making of the credit agreement,

1. (a)

   in the case of a credit agreement for running-account credit under which there is a credit limit, that amount shall be taken to be such credit limit; and

2. (b)

   in any other case, that amount shall be taken to be £100.

Where the period for which credit is to be provided is not ascertainable at the date of the making of the credit agreement, it shall be assumed that credit is provided for one year beginning with the relevant date.

Subject to CONC App 1.1.15 R, where the rate or amount of any item included in the total charge for credit or the amount of any repayment of credit under a transaction falls to be ascertained thereunder by reference to the level of any index or other factor in accordance with any formula specified therein, the rate or amount, as the case may be, shall be taken to be the rate or amount so ascertained, the formula being applied as if the level of such index or other factor subsisting at the date of the making of the credit agreement were that subsisting at the date by reference to which the formula is to be applied.

Where

1. (a)

   the period for which the credit or any part thereof is to be or may be provided cannot be ascertained at the date of the making of the credit agreement; and

2. (b)

   the rate or amount of any item included in the total charge for credit will change at a time provided in the transaction within one year beginning with the relevant date,

the rate or amount shall be taken to be the highest rate or amount at any time obtaining under the transaction in that year.

Where the earliest date on which credit is to be provided cannot be ascertained at the date of the making of the credit agreement, it shall be assumed that credit is provided on that date.

In the case of any transaction it shall be assumed

1. (a)

   that a charge payable at a time which cannot be ascertained at the date of the making of the credit agreement shall be payable on the relevant date or, where it may reasonably be expected that a borrower will not make payment on that date, on the earliest date at which it may reasonably be expected that he will make payment; or

2. (b)

   where more than one payment of a charge of the same description falls to be made at times which cannot be ascertained at the date of the making of the credit agreement, that the first such payment will be payable on the relevant date (or, where it may reasonably be expected that a borrower will not make payment on that date, at the earliest date on which it may reasonably be expected that he will make payment), that the last such payment will be payable at the end of the period for which credit is provided and that all other such payments (if any) will be payable at equal intervals between such times,

as the case may require.

1. (1)

   In this section

   1. (a)

      a reference to a rate of interest is a reference to the interest rate expressed as a fixed or variable percentage applied on an annual basis to the amount of credit drawn down;

   2. (b)

      a reference to an open-end regulated credit agreement is to a regulated credit agreement of no fixed duration and includes credits which must be repaid in full within or after a period but, once repaid, become available to be drawn down again.

This section shall not apply to regulated credit agreements which are secured on land or to prospective regulated credit agreements which are to be secured on land except to the extent that the Consumer Credit (Disclosure of Information) Regulations 2010 apply to such agreements.

1. (1)

   The total charge for credit which may be provided under an actual or prospective regulated credit agreement shall be the total cost of credit to the borrower determined in accordance with the requirements in (2) to (5) below.

2. (2)

   Subject to (3), the following costs shall be included in the total cost of credit to the borrower:1

   1. (-a)

      any fee or charge payable by the borrower to a credit broker in connection with the agreement (if the fee or charge is known to the lender);1

   2. (a)

      the costs of maintaining an account recording both payment transactions and drawdowns;

   3. (b)

      the costs of using a means of payment for both payment transactions and drawdowns;

   4. (c)

      other costs relating to payment transactions.

3. (3)

   The costs at (2) shall not be included in the total cost of credit to the borrower where

   1. (a)

      the opening of the account is optional and the costs of the account have been clearly and separately shown in the regulated credit agreement or in any other agreement made with the borrower;

   2. (b)

      in the case of an overdraft facility the costs do not relate to that facility.

4. (4)

   Costs in respect of an ancillary service shall be included in the total cost of credit to the borrower if the conclusion of a service contract is compulsory in order to obtain the credit or to obtain it on the terms and conditions marketed.

5. (5)

   The total cost of credit to the borrower shall not include

   1. (a)

      any charges payable by or on behalf of the borrower or a relative of his for non-compliance with his commitments contained in the regulated credit agreement;

   2. (b)

      charges which, for purchases of goods or services, he or a relative of his is obliged to pay whether the transaction is effected in cash or on credit.

6. (6)

   In (4), the reference to an ancillary service means a service that relates to the provision of credit under the regulated credit agreement and includes in particular an insurance or payment protection policy.

7. (7)

   The total cost of credit to the borrower must not take account of any discount, reward (including ‘cash back’) or other benefit to which the borrower might be entitled, whether such an entitlement is subject to conditions or otherwise.1

The annual percentage rate of charge shall be calculated in accordance with the mathematical formula set out in CONC App 1.2.6 R.

For the purposes of calculating the total charge for credit and the annual percentage rate of charge:2

1. (a)

   it shall be assumed that the regulated credit agreement is to remain valid for the period agreed and that the lender and the borrower will fulfil their obligations under the terms and by the dates specified in that agreement;

2. (b)

   in the case of a regulated credit agreement allowing variations in

   1. (i)

      the rate of interest, or

   2. (ii)

      where applicable, charges contained in the annual percentage rate of charge,

   where these cannot be quantified at the time of calculation, it shall be assumed that they will remain at the initial level and will be applicable for the duration of the agreement;

3. (c)

   where not all rates of interest are determined in the regulated credit agreement, a rate of interest shall, where necessary,2 be assumed to be fixed only for the partial periods for which the rate of interest is determined exclusively by a fixed specific percentage agreed when the agreement is made;

4. (d)

   2where different rates of interest and charges are to be offered for limited periods or amounts during the regulated credit agreement2, the rate of interest and the charge shall, where necessary,2 be assumed to be at the highest level for the duration of the agreement;

5. (e)

   where there is a fixed rate of interest agreed in relation to an initial period under a regulated credit agreement, at the end of which a new rate of interest is determined and subsequently periodically adjusted according to an agreed indicator, it shall, where necessary,2 be assumed that, at the end of the period of the fixed rate of interest, the rate of interest is the same as at the time of making the calculation, based on the value of the agreed indicator at that time;

6. (f)

   where the regulated credit agreement gives the borrower freedom of drawdown, the total amount of credit shall, where necessary,2 be assumed to be drawn down immediately and in full;

7. (fa)

   where the regulated credit agreement imposes, amongst the different ways of drawdown, a limitation with regard to the amount of credit and period of time, the amount of credit shall, where necessary,2 be assumed to be the maximum amount provided for in the agreement and to be drawn down on the earliest date provided for in the agreement;

8. (g)

   where the regulated credit agreement provides different ways of drawdown with different charges or rates of interest, the total amount of credit shall, where necessary,2 be assumed to be drawn down at the highest charge and rate of interest applied to the most common drawdown mechanism for the credit product to which the agreement relates;

9. (h)

   for the purposes of (g), the most common drawdown mechanism for a particular credit product shall be assessed on the basis of the volume of transactions for that product in the preceding 12 months, or expected volumes in the case of a new credit product;

10. (i)

    in the case of an overdraft facility, the total amount of credit shall, where necessary,2 be assumed to be drawn down in full and for the entire duration of the regulated credit agreement;

11. (j)

    for the purposes of (i),2 if the duration of the overdraft facility is not known,2 it shall, where necessary,2 be assumed that the duration of the facility is three months;

12. (k)

    in the case of an open-end regulated credit agreement, other than an overdraft facility, it shall, where necessary,2 be assumed that the credit is provided for a period of one year starting from the date of the initial drawdown, and that the final payment made by the borrower clears the balance of capital, interest and other charges, if any;

13. (l)

    for the purposes of (k):2

    1. (i)

       the capital is repaid by the borrower in equal monthly payments, commencing one month after the date of initial drawdown;

    2. (ii)

       in cases where the capital must be repaid in full, in a single payment, within or after each payment period, successive drawdowns and repayments of the entire capital by the borrower shall, where necessary,2 be assumed to occur over the period of one year;

    3. (iii)

       interest and other charges shall be applied in accordance with those drawdowns and repayments of capital and as provided for in the regulated credit agreement;

14. (m)

    in the case of a regulated credit agreement, other than an overdraft facility, or an open-end regulated credit agreement:2

    1. (i)

       where the date or amount of a repayment of capital to be made by the borrower cannot be ascertained, it shall, where necessary,2 be assumed that the repayment is made at the earliest date provided for under the regulated credit agreement and is for the lowest amount for which the regulated credit agreement provides;

    2. (ii)

       where it is not known on which date the regulated credit agreement is made, the date of the initial drawdown shall, where necessary,2 be assumed to be the date which results in the shortest interval between that date and the date of the first payment to be made by the borrower;

15. (n)

    where the date or amount of a payment to be made by the borrower cannot be ascertained on the basis of the regulated credit agreement or the assumptions set out in (i) to (m), it shall, where necessary,2 be assumed that the payment is made in accordance with the dates and conditions required by the lender and, when these are unknown:2

    1. (i)

       interest charges are paid together with repayments of capital;

    2. (ii)

       a non-interest charge expressed as a single sum is paid on the date of the making of the regulated credit agreement;

    3. (iii)

       non-interest charges expressed as several payments are paid at regular intervals, commencing with the date of the first repayment of capital, and if the amount of such payments is not known they shall, where necessary,2 be assumed to be equal amounts;

    4. (iv)

       the final payment clears the balance of capital, interest and other charges, if any;

16. (o)

    in the case of an agreement for running-account credit, where the credit limit applicable to the credit is not yet known, that credit limit shall, where necessary,2 be assumed to be £1,200.

1. (1)

   The annual percentage rate of charge (“APR”) is calculated by means of the equation in (2) which equates, on an annual basis, the total present value of drawdowns with the total present value of repayments and payments of charges.

2. (2)

   The equation referred to in (1) is

   
3. (3)

   For the purposes of (2)

   1. (a)

      the amounts paid by both parties at different times shall not necessarily be equal and shall not necessarily be paid at equal intervals;

   2. (b)

      the starting date shall be that of the first drawdown;

   3. (c)

      intervals between dates used in the calculations shall be expressed in years or in fractions of a year;

   4. (d)

      a year is assumed to have 365 days (366 days for leap years), 52 weeks or 12 equal months;

   5. (e)

      an equal month is assumed to have 30.41666 days (365/12) regardless of whether or not it is a leap year;

   6. (f)

      the result of the calculation shall be expressed with an accuracy of at least one decimal place; if the figure at the following decimal place is greater than or equal to 5, the figure at that particular decimal place shall be increased by one;

   7. (g)

      the equation can be rewritten as set out in (h) using a single sum and the concept of flows (Ak), which will be positive or negative, either paid or received during periods l to k , expressed in years;

   8. (h)

      the equation referred to in (g) is

      

      S being the present balance of flows; if the aim is to maintain the equivalence of flows, the value will be zero.

1. (1)

   This section specifies:

   1. (a)

      the persons or classes of persons to whom the exemption in article 60E(2) of the Regulated Activities Order applies; and

   2. (b)

      the agreements or classes of agreement to which the exemption in article 60E(2) of the Regulated Activities Order applies.

2. (1A)

   2Paragraphs (2) to (5) do not apply where the applicable agreement is an MCD article 3(1)(b) credit agreement.

3. (2)

   Where the lender is a body specified in CONC App 1.3.2 R or an authorised person with permission to accept deposits, article 60E(2) of the Regulated Activities Order applies only to

   1. (a)

      a borrower-lender-supplier agreement falling within (a) or (c) of the definition of relevant credit agreement relating to the purchase of land;

   2. (b)

      a borrower-lender agreement secured by any legal or equitable mortgage1 on land to finance

      1. (i)

         the purchase of land; or

      2. (ii)

         the provision of dwellings or business premises on any land; or

      3. (iii)

         subject to (3) below, the alteration, enlarging, repair or improvement of a dwelling or business premises on any land;

   3. (c)

      a borrower-lender agreement secured by any legal or equitable mortgage1 on land to refinance any existing indebtedness of the borrower, whether to the lender or another person, under any agreement by which the borrower was provided with credit for any of the purposes specified in (b)(i) to (iii) above.

4. (3)

   (2)(b)(iii) above applies only

   1. (a)

      where the lender is the lender under

      1. (i)

         an agreement (whenever made) by which the borrower is provided with credit for any of the purposes specified in (2)(b)(i) and (2)(b)(ii) ; or

      2. (ii)

         an agreement (whenever made) refinancing an agreement under which the borrower is provided with credit for any of the said purposes,

      being, in either case, an agreement relating to the land referred to in (2)(b)(iii) and secured by a legal or equitable mortgage1 on that land; or

   2. (b)

      where a borrower-lender agreement to finance the alteration, enlarging, repair or improvement of a dwelling, secured by a legal or equitable mortgage1 on that dwelling, is made as a result of any such services as are described in section 4(3)(e) of the Housing Associations Act 1985 which are certified as having been provided by

      1. (i)

         a local authority;

      2. (ii)

         a housing association within the meaning of section 1 of the Housing Associations Act 1985 or article 3 of the Housing (Northern Ireland) Order 1992;

      3. (iii)

         a body established by such a housing association for the purpose of providing such services as are described in the said section 4(3)(e) of the Housing Associations Act 1985;

      4. (iv)

         a charity;

      5. (v)

         the National Home Improvement Council;

      6. (vi)

         the Northern Ireland Housing Executive; or

      7. (vii)

         a body, or a body of any description, that has been approved by the Secretary of State under section 169(4)(c) of the Local Government and Housing Act 1989 or the Department of the Environment for Northern Ireland under article 103(4)(c) of the Housing (Northern Ireland) Order 1992.

5. (4)

   Where the lender is a body specified in CONC App 1.3.3 R, the exemption in article 60E(2) of the Regulated Activities Order applies only to an agreement of a description specified in that rule in relation to that body and made pursuant to an enactment or for a purpose so specified.

6. (5)

   Where the lender is a body specified in CONC App 1.3.4 R, the exemption in article 60E (2) of the Regulated Activities Order applies only to an agreement of a description falling within CONC App 1.3.1R (2)(a) to CONC App 1.3.1R (2)(c), being an agreement advancing money on the security of a dwelling-house.

1. (1)

   For the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order7, a declaration made by the borrower or hirer which provides that the borrower or hirer agrees to forgo the protection and remedies that would be available to the borrower or hirer if the agreement were a regulated credit agreement or a regulated consumer hire agreement must comply with CONC App 1.4.2R and CONC App 1.4.6R7. 2

2. (1A)

   For the purposes of CONC 1.2.10R, a declaration made by the borrower which provides that the borrower agrees to waive the protections and remedies applicable to regulated credit agreements, except for those that transposed or implemented the MCD as it applied to the United Kingdom before IP completion day, must comply with CONC App 1.4.2R and CONC App 1.4.6AR.7

3. (2)

   For the purposes of articles 60H(1)(d) and 60Q(c) of the Regulated Activities Order and of CONC 1.2.10R7, a statement in relation to the income or assets of the borrower or hirer (referred to in this section as a statement of high net worth) must comply with CONC App 1.4.3 R, CONC App 1.4.4 R and CONC App 1.4.7 R. 2

4. (3)

   For the purposes of articles 60H(1)(e) and 60Q(d) of the Regulated Activities Order and of CONC 1.2.10R7, the statement in (2) must be made during the period of one year ending with the day on which the agreement was made. 2

A declaration for the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order and of CONC 1.2.10R7 shall 2

1. (1)

   be set out in the credit agreement or consumer hire agreement no less prominently than other information in the agreement and be readily distinguishable from the background medium; and

2. (2)

   be signed by the borrower or hirer, unless the agreement is so signed.

1. (1)

   Subject to CONC App 1.4.4 R, a statement of high net worth shall be signed by

   1. (a)

      the lender or owner; or

   2. (b)

      an accountant who is a member of any of the bodies listed in (2).

2. (2)

   The bodies referred to in (1)(b) are:

   1. (a)

      the Institute of Chartered Accountants in England and Wales;

   2. (b)

      the Institute of Chartered Accountants of Scotland;

   3. (c)

      the Institute of Chartered Accounts in Ireland;

   4. (d)

      the Association of Chartered Certified Accountants;

   5. (e)

      the Chartered Institute of Management Accountants;

   6. (f)

      the Chartered Institute of Public Finance and Accountancy;

   7. (fa)

      the Association of International Accountants;5

      4
   8. (fb)

      the Association of Accounting Technicians;6

      5
   9. (fc)

      the Institute of Financial Accountants; and6

   10. (g)

       a professional body for accountants established in a jurisdiction outside the United Kingdom.

A person3 who is

1. (1)

   the lender or owner;

2. (2)

   an employee or agent of the lender or owner or a person who otherwise acts on behalf of the lender or owner in relation to the credit agreement or consumer hire agreement; or

3. (3)

   an associate of the lender or owner,

may only make a statement of high net worth if the lender or owner is a person who has Part 4A permission to accept deposits.

A declaration for the purposes of articles 60C or 60O of the Regulated Activities Order shall

1. (1)

   comply with CONC App 1.4.8 R;

2. (2)

   be set out in the credit agreement or consumer hire agreement no less prominently than other information in the agreement and be readily distinguishable from the background medium; and

3. (3)

   be signed by the borrower or hirer or where the borrower or hirer is a partnership or unincorporated body of persons be signed by, or on behalf of, the borrower or hirer, unless the agreement is so signed.

The declaration for the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order must have the following form and content- 2

“Declaration by high net worth borrower or hirer

(articles 60H(1) and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001) 2

I confirm that I have received a copy of the statement of high net worth made in relation to me for the purposes of article 60H(1)(d) 2or article 60Q(c) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

I understand that by making this declaration I will not have the benefit of the protection and remedies that would be available to me under the Financial Services and Markets Act 2000 or the Consumer Credit Act 1974 if this agreement were a regulated agreement under those Acts.

I understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the lender and the borrower is unfair to the borrower.*

I am aware that if I am in any doubt as to the consequences of making this declaration then I should seek independent legal advice”.

*This section should be omitted in the case of a consumer hire agreement

2 Declaration by high net worth borrower under an MCD article 3(1)(b) credit agreement

The declaration for the purposes of CONC 1.2.10R7 must have the following form and content-

“Declaration by high net worth borrower under an MCD article 3(1)(b) credit agreement

7

I confirm that I have received a copy of the statement of high net worth made in relation to me for the purposes of CONC 1.2.10R in the FCA’s Consumer Credit sourcebook7.

I understand that by making this declaration I will not have the benefit of the protection and remedies that would be available to me under the Financial Services and Markets Act 2000, except for those that transposed or implemented the Mortgage Credit Directive (Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property). 7

I understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the lender and the borrower is unfair to the lender.

I am aware that if I am in any doubt as to the consequences of making this declaration then I should seek independent legal advice.”

A statement of high net worth for the purposes of articles 60H(1)(d) and 60Q(c) of the Regulated Activities Order, and CONC 1.2.10R,7 must have the following form and content: 2

“Statement of High Net Worth

(articles 60H(1) and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 /CONC 1.2.10R*) 7

I/We* (insert full name) .............................................................. of (insert address and postcode).............................................................. confirm that I am/we* are a person qualified to make a statement of high net worth under rules made by the Financial Conduct Authority, by virtue of the fact that ..............................................................

In my/our* opinion (insert full name of borrower or hirer)

..........................................

of (insert address and post code of borrower or hirer)

..........................................

..........................................

is an individual of high net worth because he/she*

(a) received during the previous financial year net income totalling an amount of not less than1 £150,000*; and/or

(b) had throughout that year net assets with a total value of not less than £500,000*.

(insert one of the following declarations as appropriate)

I/We* declare that I am/we are* not connected to [insert name of the lender(s)/owner(s)][any person who is a lender/owner offering credit agreements/consumer hire agreements*].

I/We* declare that I am/we are* [connected to] [insert name of lender(s)/owner(s)] as I am/we are* [the lender(s)/owner(s)/an employee of/an agent of the lender(s)//owner(s)/a person who otherwise acts on behalf of the lender(s)//owner(s) in relation to the credit agreement/consumer hire agreement/an associate of the lender(s)//owner(s)].*

I/We declare that I am/we are*/[a/an] lender(s)/owner(s) offering credit agreements/consumer hire agreements/ an employee of/an agent of/a person who otherwise acts on behalf of/ an associate of lender(s)/owner(s) offering credit agreements/consumer hire agreements.*

In this statement-

(a) “associate” shall be construed in accordance with article 60L of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

(b) “financial year” means a period of one year ending with 31st March;

(c) “net assets” shall not include -

(i) the value of the borrower’s or hirer's primary residence or any loan secured on that residence;

(ii) any rights of the borrower or hirer under a qualifying contract of insurance within the meaning of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and

(iii) any benefits (in the form of pensions or otherwise) which are payable on the termination of the service of the borrower or hirer or on his retirement and to which he is (or his dependents are), or may be, entitled.

(d) “net income” means the total income of the borrower or hirer from all sources reduced by the amount of income tax and national insurance contributions payable in respect of it; and

(e) “previous financial year” means the financial year immediately preceding the financial year during which the statement is made”.

*Delete as appropriate.

2 1

A declaration for the purposes of articles 60C or 60O of the Regulated Activities Order must have the following form and content

“Declaration for exemption relating to businesses

(articles 60C and 60O of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)

I am/We are* entering this agreement wholly or predominantly for the purposes of a business carried on by me/us or intended to be carried on by me/us.

I/We* understand that I/We* will not have the benefit of the protection and remedies that would be available to me/us* under the Financial Services and Markets Act 2000 or under the Consumer Credit Act 1974 if this agreement were a regulated agreement under those Acts.

I/We* understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the lender and the borrower is unfair to the borrower.**

I am/We are aware that, if I am/we are in any doubts as to the consequences of the agreement not being regulated by the Financial Services and Markets Act 2000 or the Consumer Credit Act 1974, then I/we* should seek independent legal advice.”.

*Delete as appropriate.

**This section should be omitted in the case of a consumer hire agreement.