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CONC 1.2 Who? What? Where?

CONC 1.2.1R

Subject to CONC 1.2.8R and MCOB 14.1.5R, 2CONC applies to a firm with respect to carrying on credit-related regulated activities and connected activities, unless otherwise stated in, or in relation to, a rule.1

CONC 1.2.2R

A firm must:

  1. (1)

    ensure that its employees and agents comply with CONC; and

  2. (2)

    take reasonable steps to ensure that other persons acting on its behalf comply with CONC.

Guidance on appointed representatives

CONC 1.2.3G
  1. (1)

    Although CONC does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of CONC, anything done or omitted by a firm's appointed representative (when acting as such) will be treated as having been done or omitted by the firm (section 39(4) of the Act).

  2. (2)

    Firms should refer to SUP 12 (Appointed representatives), which sets out requirements which apply to firms using appointed representatives.

Where?

CONC 1.2.5R

CONC, except in relation to CONC 3, applies with respect to activities carried on by a firm:

  1. (1)

    with a customer whose habitual residence is in the UK from an establishment maintained by the firm (or its appointed representative) in the UK; or

  2. (2)

    with a customer whose habitual residence is in the UK from an establishment of the firm (or its appointed representative) outside the UK.

EEA territorial scope rule: compatibility with European law

CONC 1.2.6R
  1. (1)

    CONC does not apply to an incoming ECA provider where, in providing a service, the provider is acting as such.

  2. (2)

    CONC applies to an outgoing ECA provider where, in providing a service, the provider is acting as such.

  3. (3)

    The territorial scope of CONC is otherwise modified to the extent necessary to be compatible with European law.

  4. (4)

    This rule overrides every other rule in this sourcebook.

Note: article 3(3) of, and the Annex to, the E-Commerce Directive

2Agreements secured on land

CONC 1.2.7G
  1. (1)

    2CONC does not apply to credit agreements secured on land, with some limited exceptions as set out in (3) and (4), below.

  2. (2)

    Agreements secured by a second or subsequent charge on the customer’s home are, where regulated, governed by MCOB from 21 March 2016 (subject to transitional provisions allowing for the earlier adoption of MCOB). For detailed guidance on the regulation of secured lending, see PERG 4.

  3. (3)

    The agreements secured on land to which CONC may apply include the following agreements (unless the agreement in question, or activity in relation to it, is otherwise exempt or excluded):

    1. (a)

      an agreement under which the borrower is a relevant recipient of credit (within the meaning of article 60L of the Regulated Activities Order) but is not one or more individuals or trustees; for example, a partnership comprising two or three partners, one but not all of the partners in which is a body corporate; and

    2. (b)

      an MCD article 3(1)(b) credit agreement secured on land, less than 40% of which is used as or in connection with a dwelling (whether by the borrower or anyone else) to the extent specified in CONC 1.2.8R.

  4. (4)

    Broking in relation to the above agreements may be credit broking under article 36A of the Regulated Activities Order, whether the agreement is regulated or exempt. There are also some other secured credit agreements which are exempt, but the broking of which may still constitute credit broking, because some exemptions are disregarded by article 36A of the Regulated Activities Order. One example is a loan of more than £25,000 entered into wholly or predominantly for the purposes of a borrower’s business and secured by a second or subsequent charge on the borrower’s home: such a loan is not a regulated mortgage contract because it is a second charge business loan (as defined by article 61A of the Regulated Activities Order), and is an exempt agreement by virtue of article 60C(3) of the Regulated Activities Order; article 36A(4)(a) of the Regulated Activities Order disregards that exemption.

2Application to MCD article 3(1)(b) creditors and MCD article 3(1)(b) credit intermediaries

CONC 1.2.8R

2Subject to CONC 1.2.10R:

  1. (1)

    the following provisions of CONC apply to an MCD article 3(1)(b) creditor and to an MCD article 3(1)(b) credit intermediary:

    1. (a)

      CONC 1.2 and CONC 1.3 (application and purpose and guidance on financial difficulties);

    2. (b)

      CONC 2.2 (general principles for credit-related regulated activities);

    3. (c)

      CONC 2.7 (distance marketing);

    4. (d)

      CONC 2.8 (e-commerce); and

    5. (e)

      CONC 2.9 (prohibition of unsolicited credit tokens);

  2. (2)

    the following provisions of CONC additionally apply to an MCD article 3(1)(b) creditor:

    1. (a)

      CONC 2.4 (credit references: conduct of business: lenders and owners);

    2. (b)

      CONC 2.10 (mental capacity guidance);

    3. (c)

      CONC 4.6 (pre-contract disclosure: continuous payment authorities);

    4. (d)

      CONC 6.4 (appropriation of payments);

    5. (e)

      CONC 6.5 (assignment of rights); and

    6. (f)

      CONC 6.7 (post contract: business practices); and

  3. (3)

    the following provisions of CONC additionally apply to an MCD article 3(1)(b) credit intermediary (unless it is also acting as an MCD article 3(1)(b) creditor and carrying out a direct sale of the proposed article 3(1)(b) credit agreement)3:

    1. (a)

      CONC 2.5 (conduct of business: credit broking);

    2. (b)

      CONC 4.4.2R(4) (pre-contractual requirements: credit brokers);

    3. (c)

      CONC 5.4 (conduct of business: credit brokers), and the reference in that rule to credit broking includes a reference to advising on regulated credit agreements for the acquisition of land; and

    4. (d)

      CONC 6.8 (post contract business practices: credit brokers).

CONC 1.2.9G
CONC 1.2.10R
  1. (1)

    2CONC 1.2.8R and the rules applied by CONC 1.2.8R do not apply to an MCD article 3(1)(b) creditor or MCD article 3(1)(b) credit intermediary where the MCD article 3(1)(b) credit agreement would be an exempt agreement pursuant to article 60H(1) of the Regulated Activities Order but for:

    1. (a)

      paragraph (1)(b)(ii)(bb) of article 60H of the Regulated Activities Order (which relates to high net worth borrowers); or

    2. (b)

      article 60HA of the Regulated Activities Order (exemptions not permitted under the MCD).

  2. (2)

    Agreements of the kind referred to in paragraph (1)(a) are excluded from CONC 1.2.8R and the rules applied by CONC 1.2.8R only if the rules in CONC App 1.4.1R to CONC App 1.4.4R, and the rules to which those rules refer, are complied with.

[Note: article 60H(2) of the Regulated Activities Order]

CONC 1.2.11G

2The purpose of CONC 1.2.10R(1)(a) is to enable a high net worth borrower under an MCD article 3(1)(b) credit agreement to waive the protections and remedies applicable to regulated credit agreements, except for those that transpose or implement the MCD. The MCD does not contain an exemption or derogation in respect of borrowing above a certain amount, unlike the Consumer Credit Directive: the EUR75,000 threshold in that Directive has been implemented in the form of the exemption for high net worth borrowers in article 60H of the Regulated Activities Order.