User Guide - The Financial Conduct Authority

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financial conduct authority
They regulate firms and financial advisers so that markets and financial systems remain sound, stable and resilient. They also encourage transparent pricing that’s easy for everyone to understand. They state that their aim is to help firms put the interests of their customers and the integrity of the market at the core of what they do but it's still to be seen whether they can achieve their aims.

View Website --> http://www.fca.org.uk/ NEW WEBSITE https://www.the-fca.org.uk/

what do they do
They regulate the financial services industry in the UK and their aim is to protect consumers, ensure our industry remains stable and promote healthy competition between financial services providers.

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why do they do it
They claim to want consumers to have access to financial services products that meet their needs, from firms they can trust. They also want to promote effective competition in the financial services industry and regulate firms to make sure they’re giving consumers a fair deal.

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how they are governed
The Board sets FCA policy, but day-to-day decisions and staff management are the responsibility of the Executive Committee. They are accountable to the Treasury and, through them, to Parliament. The FCA is operationally independent of Government and funded entirely by the firms they regulate.

View More --> http://www.fca.org.uk/about/governance NEW WEBSITE https://www.the-fca.org.uk/about

how they are funded
The FCA is funded entirely by the financial services firms they regulate. To finance their work, they charge fees to authorised firms that follow the rules and guidelines. The FCA is accountable to the Treasury, which is responsible for the UK’s financial system, and Parliament.

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consumer credit sourcebook (CONC)
The CONsumer Credit sourcebook (CONC) is the specialist sourcebook for credit-related regulated activities, and it is this that we will utilise and refer to within AADforum. The posts in this thread will explain the main sections of CONC and how they affect us.

The purpose of CONC is to set out the detailed obligations that are specific to credit-related regulated activities and activities connected to those activities carried on by firms. These build on and add to the high-level obligations, for example, in PRIN, GEN and SYSC, and the requirements in or under the CCA.

The sourcebook is not officially released until 1st April 2014.

CONC 1 - Application and purpose and guidance on financial difficulties
CONC 2 - Conduct of business standards: general
CONC 3 - Financial promotions and communications with customers
CONC 4 - Pre-contractual requirements
CONC 5 - Responsible lending
CONC 6 - Post contractual requirements
CONC 7 - Arrears, default and recovery (including repossessions)
CONC 8 - Debt advice
CONC 9 - Credit reference agencies
CONC 10 - Prudential rules for debt management firms
CONC 11 - Cancellation
CONC 12 - Requirements for firms with interim permission for credit-related regulated activities
CONC 13 - Guidance on the duty to give information under sections 77, 78 and 79 of the Consumer Credit Act 1974
CONC 14 - Requirement in relation to agents
CONC 15 - Second charge lending
CONC App 1 - Total charge for credit rules
CONC transchedule - Transitional Provisions and Schedules

The posts below, in this user guide, will explain the most relevant sections in a Plain English format, similar to the old OFT Guides within AAD & our Forum.

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The Financial Conduct Authority - Relevant Sections

relevant sections & glossary

The hyperlinks shown in orange within the posts below all link to the official glossary of meaning, at the FCA website. The relevant sections, that we feel affect the users at AAD, and which will be discussed in this user guide are as follows;

• [*=1]CONC 1.3 Guidance on financial difficulties
  [*=1]CONC 2.2 General principles for credit-related regulated activities
  [*=1]CONC 2.3 Conduct of business
  [*=1]CONC 2.4 Credit references: conduct of business: lenders and owners
  [*=1]CONC 2.5 Conduct of business: credit broking
  [*=1]CONC 2.6 Conduct of business: debt counselling, adjusting & providing credit information services
  [*=1]CONC 2.9 Prohibition of unsolicited credit tokens
  [*=1]CONC 2.10 Mental capacity guidance
  [*=1]CONC 3 Financial promotions and communications with customers
  [*=1]CONC 4 Pre-contractual requirements
  [*=1]CONC 5 Responsible Lending

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CONC 1.3 Guidance on financial difficulties

CONC 1.3 guidance on financial difficulties

In CONC (unless otherwise stated in or in relation to a rule), the following matters, among others, of which a firm is aware or ought reasonably to be aware, may indicate that a customer is in financial difficulties:

CONC 1.3.1 (01/04/2014)

(1) consecutively failing to meet minimum repayments in relation to a credit card or store card;
(2) adverse accurate entries on a credit file, which are not in dispute;
(3) outstanding county court judgments for non-payment of debt;
(4) inability to meet repayments out of disposable income or at all, for example, where there is evidence of non-payment of essential bills (such as, utility bills), the customer having to borrow further to repay existing debts, or the customer only being able to meet repayments of debts by the disposal of assets or security;
(5) consecutively failing to meet repayments when due;
(6) agreement to a debt management plan or other debt solution;
(7) evidence of discussions with a firm (including a not-for-profit debt advice body) with a view to entering into a debt management plan or other debt solution or to seeking debt counselling.

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CONC 2.2 General principles for credit-related regulated activities

CONC 2.2 general principles for credit-related regulated activities

CONC 2.2.2 (01/04/2014) - General Principles

Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly. Examples of behaviour by or on behalf of a firm which is likely to contravene Principle 6 include:

(1) targeting customers with regulated credit agreements which are unsuitable for them, by virtue of their indebtedness, poor credit history, age, health, disability or any other reason;
(2) subjecting customers to high-pressure selling, aggressive or oppressive behaviour, or unfair coercion;
(3) not allowing customers who are unable to make payments a reasonable time and opportunity to meet repayments;
(4) taking steps to repossess a customer's home, other than as a last resort.

[Note paragraph 7.14 of ILG and 6.3 of SCLG]

[Note: paragraphs 2.3 of ILG, 2.2 of CBG and 2.3 of DMG]

CONC 2.2.3 (01/04/2014) - Duty not to use misleading names

A firm must not carry on a credit-related regulated activity under a name which is likely to mislead customers about the status of the firm or the nature of its business, or in any other way.

[Note: section 25(1AD) of CCA]

CONC 2.2.4 (01/04/2014)

(1) In relation to CONC 2.2.3 R, an example of where a name may mislead is if the average customer of the firm is likely to be misled by the name of the firm.

(2) Examples of the matters concerning a firm's status or the nature of its business about which its name may mislead customers include:

(a) the identity or nature of the firm;
(b) its commercial or profit-seeking status;
(c) its role, including any relationship with any other person;
(d) the extent of its authority;
(e) stating or implying that the firm is a public body or that it is related or connected in some way to a charitable, not-for-profit or governmental or local governmental organisation or to the courts;
(f) the nature of the products or services supplied;
(g) the cost of those products or services; and
(h) the scale of the business including its geographical scope.

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CONC 2.3 General conduct of business

CONC 2.3 general conduct of business

CONC 2.3.2 (01/04/2014) - General Conduct

A firm must explain the key features of a regulated credit agreement to enable the customer to make an informed choice as required by CONC 4.2.5 R (adequate explanations).

[Note: paragraph 2.2 of ILG]

CONC 2.3.3 (01/04/2014)

CONC 6.7.2 R requires a firm to monitor a customer's repayment record and take appropriate action where there are signs of actual or possible repayment difficulties.

CONC 2.3.4 (01/04/2014)

A firm must take reasonable steps to satisfy itself that any credit brokers with whom the firm deals are authorised persons or appointed representatives.

[Note: paragraph 1.27 of CBG]

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CONC 2.4 Credit references conduct of business lenders and owners

CONC 2.4 credit references conduct of business

CONC 2.4.2 (01/04/2014) - Disclosure of name and address of credit reference agencies consulted

(1) Not later than the lender ("L") informs a credit broker that L is not willing to make a regulated credit agreement, L must, unless L informs the customer directly that L is not willing to make the agreement, inform the credit broker of the name and address (including an appropriate e-mail address) of any credit reference agency from which L has, during the negotiations relating to the proposed agreement, applied for information about the financial standing of the customer.

[Note: regulation 2 of SI 1977/330]

(2) Not later than the owner ("O") informs a credit broker that O is not willing to make a regulated consumer hire agreement, O must, unless O informs the customer directly that O is not willing to make the agreement, inform the credit broker of the name and address (including an appropriate e-mail address) of any credit reference agency from which O has, during the negotiations relating to the proposed agreement, applied for information about the financial standing of the customer.

[Note: regulation 2 of SI 1977/330]

CONC 2.4.3 (01/04/2014) - Searching Credit Files

A firm undertaking a credit reference search should not leave evidence of an application on a credit file where a customer is not yet ready to apply. Where practicable, firms should facilitate customers shopping around for credit by offering a 'quotation search' facility.

[Note: paragraph 3.13 (box 2) of ILG]

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Re: User Guide - The Financial Conduct Authority

This thread is working progress and will update until it's complete. Then we'll open the section fully.