agreement:
a. the interest rate is set to directly track the movement in an external index (such as a base rate), which was adequately explained under CONC 4.2.15R and was clearly stated in the agreement; or b. the period of a promotional interest rate
has come to an end.
You must first allocate a repayment to a debt subject to the highest rate of interest for the outstanding balance on a credit card or store card.
Interest rate variations
(R & G) For firms with the right to increase the interest rate under a regulated credit agreement, the regulator expects firms to have valid reasons for raising interest rates if they do so.
Paragraph 6.20
of ILG There are no rules or guidance in this sub-section that do not feature in CCA/OFT regulation or legislation.
Guidance to rule:
Note that paragraph 6.20 of ILG is now a regulatory rule.
You must have valid reasons if you raise the interest rate, and if you do so based on changes in the risk presented by the customer, you must notify the customer of this, and provide an explanation if the customer requests it.
Rules on refinancing:
general (R) The regulator sets out general rules on the refinancing of a customer’s existing credit with the firm.
Paragraphs 4.27
and 6.24 of ILG Guidance to rule:
Note that paragraphs 4.27 and 6.24 of ILG are now regulatory rules.
In addition, the regulator has introduced the definition of the terms ‘refinance’ and ‘exercise forbearance’ as new rules:
CONC 6.7.17R (1):
In CONC 6.7.18R to CONC 6.7.23R ‘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:
a. agreeing with the customer to replace, vary or supplement an existing regulated credit agreement;
b. exercising a contractual power contained in an existing regulated credit agreement;
or
c. other means, for example, granting an indulgence or waiver to the customer.
CONC 6.7.17R (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:
a. there is no charge in connection with the refinancing; or
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.
CONC 6.7.17R (3):
The term ‘refinance’ within paragraph (1) does not include where, under a regulated credit agreement repayable in installments, 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.
You must not encourage a customer to refinance a regulated credit agreement if the result would mean that the customer’s commitments are not sustainable.
Rules on refinancing:
high-cost short-term credit (R & G)
The regulator sets out rules on the refinancing of a customer’s existing high-cost short-term credit with the firm.
Paragraph 6.25
of ILG The following rules have been introduced by the regulator:
CONC 6.7.20R:
Before a firm agrees to refinance high-cost short-term credit, it must:
1. give or send an information sheet to the customer; and
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:
[see modifications listed in CONC 6.7.20R (3) to CONC 6.7.20R (5)]
CONC 6.7.23R:
A firm must not refinance high-cost short-term credit (other than by exercising forbearance) on more than two occasions.
Before you agree to refinance high-cost short-term credit, you must send the customer an information sheet using the text provided by section 86B of the CCA, with the FCA’s modifications as set out in CONC 6.7.20R. You must not refinance high-cost short-term credit more than twice.
Continuous payments authority: post agreement obligations (R)
The regulator sets out the firm’s obligations with respect to an agreed continuous payment authority with a customer.
Paragraph 3.9 of
DCG There are no rules or guidance in this sub-section that do not feature in CCA/OFT regulation or legislation.
Legislation to rule:
Paragraph 3.9miii of DCG is now a regulatory rule.
You must not amend the terms of a continuous payment authority without first explaining the reason for this and obtaining the customer’s consent.
6.8 Post contract business practices credit brokers Application (R) Section 6.8 of CONC
applies to a firm with respect to credit broking.
N/A –
application N/A – application
Business practices (G) The regulator expects firms to be familiar with, and have systems and procedures to comply with, relevant statutory requirements when giving or receiving information
in accordance with the CCA.
N/A The following guidance has been introduced by the regulator:
CONC 6.8.2G:
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.
Where you are responsible for the information exchanged with your customers relative to the provisions of the CCA, you must have adequate systems and procedures in place in order to comply with the relevant statutory requirements of the CCA.
Refunds of brokers’
fees (R & G)` The regulator sets out the circumstances surrounding an individual’s right to a refund of the firm’s fee under section 155 of the CCA.
Paragraphs 6.1, 6.2, 6.4, 6.10, 6.11, ,6.13 6.17 and 6.18 of CBG
There are no rules or guidance in this sub-section that do not feature in CCA.OFT regulation or legislation.
Guidance to rule:
Note that paragraph 6.17 of CBG is now a regulatory rule.
Where section 155 of the CCA applies, you must respond to a request for a refund.
7.1 Application
Who? What? (R & G Unless a rule or section applies differently, CONC 7 applies to consumer credit lending firms; firms with respect to consumer hiring firms operating an electronic system lending to prospective borrowers under a P2P agreement; and firms with respect to debt collecting.
N/A –
application N/A – application
7.2 Clear effective and appropriate arrears policies and procedures Arrears policies
(R & G) The regulator requires firms to have clear, effective and appropriate policies and procedures for arrears and for the fair and appropriate treatment of vulnerable customers.
Paragraph 7.2 of ILG Paragraphs 2.2 and 3.7r of DCG
There are no rules or guidance in this sub-section that do not feature in CCA/OFT regulation or legislation.
Guidance to rule:
Paragraphs 7.2, 7.2 (box) of ILG and 2.2 (box)