CONC explained: FCA consumer-credit rules

What CONC covers

CONC contains rules and guidance for regulated consumer-credit activities. Its scope includes areas such as financial promotions and communications, pre-contract requirements, creditworthiness, post-contract conduct, arrears, forbearance, default and recovery.

The sourcebook builds on higher-level obligations in PRIN and SYSC and operates alongside requirements in or under the Consumer Credit Act.

Creditworthiness and affordability: CONC 5.2A

For consumer-credit lending within its scope, CONC 5.2A requires a reasonable creditworthiness assessment before entering into a regulated credit agreement or making certain significant increases in credit. The assessment must consider both credit risk and affordability risk.

The rules are deliberately proportionate. They do not impose one identical checklist for every loan. The amount, term, repayments, cost, type of credit and information already known to the lender can all affect what a reasonable assessment requires.

This is why a strong affordability complaint asks what the lender knew, what proportionate checks were reasonable in those circumstances, and what adequate checks would probably have shown.

Arrears and forbearance: CONC 7.3

CONC 7 contains important protections once a customer is in, or approaching, arrears or default. Among other things, firms within scope must treat customers with forbearance and due consideration and take account of individual circumstances when determining appropriate support.

The Consumer Duty now sits alongside these detailed rules. A complaint about financial difficulty can therefore involve both a specific CONC requirement and the wider obligation to support customers and avoid foreseeable harm where the Duty applies.

Disputed debt: CONC 7.14

Where a customer disputes a debt on valid grounds, or what may be valid grounds, CONC 7.14 contains particularly useful rules. It includes requirements to suspend recovery steps in relevant circumstances, investigate the dispute and provide details of the debt in a timely manner.

The FCA guidance expressly recognises disputes such as pursuing the wrong person, a debt that does not exist, or an incorrect amount. Where identity or amount is disputed, the rules place responsibility on the firm to establish the relevant position.

Rule, guidance and application

FCA Handbook references often end with a letter. R means rule; G means guidance. The application provisions at the start of a chapter can be just as important as the wording you want to quote.

Before relying on a CONC provision, check that the firm, activity, agreement and date fall within its scope. A useful rule applied to the wrong product is not useful evidence.