PERG 8.17-A 1Financial promotions concerning consumer credit and consumer hire

Section 21 of the Act applies to financial promotions in relation to relevant consumer credit and consumer hire. This section sets out guidance about such financial promotions.

Rights under a relevant credit agreement are a controlled investment. A relevant credit agreement is defined as a credit agreement other than a regulated mortgage contract or a regulated home purchase plan.

Rights under a consumer hire agreement are also a controlled investment.

Providing relevant consumer credit is a controlled activity. This is defined as entering into a relevant credit agreement (other than an agreement under which qualifying credit is provided) as lender, or exercising or having the rights to exercise the rights of the lender under such an agreement.

The controlled activities also include providing consumer hire. A person provides consumer hire if he enters into a regulated consumer hire agreement (or an agreement that would be such an agreement were it not exempt under article 60O (exempt agreements: exemptions relating to the nature of the agreement) or 60Q (exempt agreement: exemptions relating to nature of hirer) of the Regulated Activities Order) as owner or exercises or has the right to exercise the rights of the owner under such an agreement.

Operating an electronic system in relation to lending is a controlled activity. For the purposes of this controlled activity, the controlled investment of rights under a relevant credit agreement includes rights under an agreement within paragraph 4C(4) of Schedule 1 to the Financial Promotion Order (which is similar to an agreement within article 36H of the Regulated Activities Order, guidance on which is given in PERG 2.7.10 G).

There are three other controlled activities that involve both of the controlled investments of relevant credit agreements and consumer hire agreements:

1. (1)

   credit broking;

2. (2)

   debt adjusting;

3. (3)

   debt counselling;

The controlled activities in PERG 8.17-A.6 G and PERG 8.17-A.7 G are substantially the same as the regulated activities of operating an electronic system in relation to lending, credit broking, debt adjusting and debt counselling (although there are some technical differences between the controlled activity of credit broking and the regulated activity of credit broking. For example, the credit broking controlled activity captures all relevant credit agreements (including those to which the exemption relating to number of repayments to be made in article 60F of the Regulated Activities Order applies). Also, an activity is not the controlled activity of credit broking to the extent that it constitutes the controlled activity of arranging qualifying credit). Guidance on these regulated activities is given in PERG 2.7.7E G (credit broking), PERG 2.7.7H G (operating an electronic system), PERG 2.7.8B G (debt adjusting) and PERG 2.7.8C G (debt counselling). Agreeing to carry on the above activities also constitutes a controlled activity.

Financial promotions about relevant consumer credit or consumer hire are subject to the exemptions in Part IV of the Financial Promotion Order (Exempt communications: all controlled activities). A number of the exemptions in Part VI of the Financial Promotion Order (Exempt communications: certain controlled activities) also apply. Guidance on some of these (which apply to financial promotions about both qualifying credit and relevant consumer credit) is given in PERG 8.17.10 G to PERG 8.17.12 G. There is one exemption that applies specifically to relevant consumer credit and consumer hire, referred to in PERG 8.17-A.10 G.

1. (1)

   Article 46A of the Financial Promotion Order exempts a communication which relates to the controlled activities of operating an electronic system in relation to lending, providing relevant consumer credit or providing consumer hire.

2. (2)

   This exemption applies only if the communication:

   1. (a)

      indicates clearly that a person is willing to engage in the investment activity for the purposes of another person's business; and

   2. (b)

      does not indicate (by express words or otherwise) that the person is willing to engage in the investment activity for any other purpose.

3. (3)

   For the purposes of this exemption, references to a "business" do not include a business carried on by the person communicating the promotion, or by a person who is a credit broker in relation to the agreement to which the promotion relates.