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CONC 3.1 Application

1

[Note: Until 31 March 2015, transitional provisions apply to CONC 3: see CONC TP 6.1]

Who? What?

CONC 3.1.1 R

This chapter, unless a rule in CONC 3 specifies differently, applies to a firm.

CONC 3.1.2 G

Under section 39(3) of the Act, a firm is responsible for financial promotionscommunicated by its appointed representatives when acting as such.

CONC 3.1.3 R

This chapter, unless a rule in CONC 3 specifies differently, applies to:

  1. (1)

    a communication with a customer in relation to a credit agreement;

  2. (2)

    the communication or approval for communication of a financial promotion in relation to a credit agreement;

  3. (3)

    a communication with a customer in relation to credit broking;

  4. (4)

    the communication or approval for communication of a financial promotion in relation to credit broking;

  5. (5)

    a communication with a borrower or a prospective borrower in relation to operating an electronic system in relation to lending; and

  6. (6)

    the communication or approval for communication of a financial promotion to a borrower or a prospective borrower in relation to operating an electronic system in relation to lending.

CONC 3.1.4 R

The clear fair and not misleading rule in CONC 3.3.1 R and the general requirements rule in CONC 3.3.2 R and the guidance inCONC 3.3.5 G to CONC 3.3.11 G also, unless a rule or guidance in those paragraphs specifies differently, apply to:

  1. (1)

    a communication with a customer in relation to debt counselling or debt adjusting; and

  2. (2)

    the communication or approval for communication of a financial promotion in relation to debt counselling or debt adjusting.

CONC 3.1.4A G

3 Firms are reminded that the rules and guidance in CONC 3.9 also apply to financial promotions and communications with a customer in relation to debt counselling and debt adjusting.

CONC 3.1.5 R

CONC 3.3.1 R also applies to:

  1. (1)

    a communication with a customer in relation to a consumer hire agreement;

  2. (2)

    the communication or approval for communication of a financial promotion in relation to a consumer hire agreement; and

  3. (3)

    a communication with a customer in relation to providing credit information services.

CONC 3.1.6 R

CONC 3 does not apply to:

  1. (1)

    a financial promotion or a communication which expressly or by implication indicates clearly that it is solely promoting credit agreements or consumer hire agreements or P2P agreements for the purposes in each case of a customer's business;

  2. (2)

    a financial promotion or a communication to the extent that it relates to qualifying credit; or

  3. (3)

    an excluded communication.

CONC 3.1.7 R
  1. (1)

    CONC 3 does not apply (apart from the provisions in (2)) to a financial promotion or communication that consists of only one or more of the following:

    1. (a)

      the name or a trading name 3of the firm (or its appointed representative);

    2. (b)

      a logo;

    3. (c)

      a contact point (address (including e-mail address), telephone, facsimile number and website address);

    4. (d)

      a brief, factual description of the type of product or service provided by the firm.

  2. (2)

    The provisions in CONC 3 which apply to a financial promotion or communication which falls within (1) are:

    1. (a)

      CONC 3.1, CONC 3.5.1 R and CONC 3.6.1 R (application);

    2. (b)

      CONC 3.3.1 R (clear, fair and not misleading);

    3. (c)

      CONC 3.3.3 R (credit regardless of status);

    4. (d)

      CONC 3.5.3 R, CONC 3.5.5 R, CONC 3.6.6 R (requirement for representative example or typical APR etc);

    5. (e)

      CONC 3.5.7 R (other financial promotions requiring a representative APR);

    6. (f)

      CONC 3.5.12 R (restricted expressions) and CONC 3.6.8 R (restricted expressions); and

    7. (g)

      any other rules in CONC which are necessary or expedient to apply the rules in (a) to (f).

CONC 3.1.8 G

CONC 3.1.7R (1) does not enable detailed information to be given about credit available from the firm. Firms should note that the image advertising exclusion in CONC 3.1.7R (1) is subject to compliance with the rules specified in (2), including the rules which require the inclusion of a representative APR in specified circumstances. A name or logo may trigger the requirement to include a representative APR. Firms should not include any information not referred to in CONC 3.1.7R (1) and should avoid the use of names, logos or addresses, for example, which attempt to convey additional product or cost-related information.

Where?

CONC 3.1.9 R

This chapter applies to a firm in relation to:

  1. (1)

    a communication with, or the communication or approval for communication of a financial promotion to, a person in the UK;

  2. (2)

    the communication of an unsolicited real time financial promotion, unless it is made from a place, and for the purposes of a business which is only carried on, outside the UK; and

  3. (3)

    the communication or approval for communication of a financial promotion that is an electronic commerce communication to a person in an EEA State other than the UK;

    2

and for the purposes of the application of this chapter, it is immaterial whether the credit agreement or the consumer hire agreement to which the financial promotion or communication relates is subject to the law of a country outside the UK.

CONC 3.2 Financial promotion general guidance

CONC 3.2.1 G

The rules in this chapter adopt various concepts from the restriction on financial promotions by unauthorised persons in section 21(1) of the Act (Restrictions on financial promotion). Guidance on that restriction and the communications which are exempt from it is contained in PERG 8 (Financial promotion and related activities) and that guidance will be relevant to interpreting these rules. In particular, guidance on the meaning of:

  1. (1)

    'communicate' is in PERG 8.6 (Communicate); and

  2. (2)

    'invitation or inducement' and 'engage in investment activity' (two elements which, with 'communicate', make up the definition of 'financial promotion') is in PERG 8.4 (Invitation or inducement).

CONC 3.2.2 G

The Privacy and Electronic Communications (EC Directive) Regulations 2003 apply to unsolicited telephone calls, fax messages and electronic mail messages for direct marketing purposes. The Information Commissioner’s Office has produced guidance on the Regulations.

Meaning of “prominent”

CONC 3.2.3 G

1For the purposes of this chapter, information or a statement included in a financial promotion or communication will not be treated as prominent unless it is presented, in relation to the other content of the financial promotion or communication, in such a way that it is likely that the attention of the average customer to whom the financial promotion or communication is directed would be drawn to it.

CONC 3.3 The clear fair and not misleading rule and general requirements

CONC 3.3.1 R
  1. (1)

    A firm must ensure that a communication or a financial promotion is clear, fair, and not misleading.

    [Note: paragraphs 2.2 of ILG, 3.16 of DMG and 3.1 of CBG]

  2. (1A)

    A firm must ensure that each communication and each financial promotion:3

    1. (a)

      is clearly identifiable as such;3

    2. (b)

      is accurate;3

    3. (c)

      is balanced and, in particular, does not emphasise any potential benefits of a product or service without also giving a fair and prominent indication of any relevant risks;3

    4. (d)

      is sufficient for, and presented in a way that is likely to be understood by, the average member of the group to which it is directed, or by which it is likely to be received; and3

    5. (e)

      does not disguise, omit, diminish or obscure important information, statements or warnings.3

  3. (1B)

    A firm must ensure that, where a communication or financial promotion contains a comparison or contrast, the comparison or contrast is presented in a fair and balanced way and is meaningful.3

  4. (2)

    If, for a particular communication or financial promotion, a firm takes reasonable steps to ensure it complies with (1), (1A) and (1B),3 a contravention does not give rise to a right of action under section 138D of the Act.

General requirements

CONC 3.3.2 R

A firm must ensure that a communication or a financial promotion:

  1. (1)

    uses plain and intelligible language;

  2. (2)

    is easily legible (or, in the case of any information given orally, clearly audible);

  3. (3)

    specifies the name of the person making the communication or communicating the financial promotion or the person on whose behalf the financial promotion is made; and

  4. (4)

    in the case of a communication or financial promotion in relation to credit broking, specifies3 the name3 of the lender (where it is known).

    [Note: paragraph 4.8a of CBG]

[Note: regulation 3 of CCAR 2004 and regulation 3 of CCAR 2010]

CONC 3.3.3 R
  1. (1)

    A firm must not in a financial promotion or a communication to a customer state or imply3 that credit is available regardless of the customer’s financial circumstances or status.

[Note: paragraphs 3.7o of CBG and 5.2 of ILG]

  1. (2)

    This rule does not apply to a financial promotion or communication relating to a credit agreement under which a person takes an article in pawn and the customer’s total financial liability (including capital, interest and all other charges) is limited under the agreement to the proceeds of sale which would represent the true market value (within the meaning of section 121 of the CCA) of the article or articles pawned by the customer.3

CONC 3.3.4 G
  1. (1)

    A firm's trading name, internet address or logo, in particular, could fall within CONC 3.3.3 R.

    [Note: paragraph 5.2 (box) of ILG]

  2. (2)

    A statement or an implication that credit is guaranteed or pre-approved, or is not subject to any credit checks or other assessment of creditworthiness, may contravene CONC 3.3.3R. Firms are reminded of the requirements of CONC 5 (Responsible lending).3

Guidance on clear, fair and not misleading

CONC 3.3.5 G

[deleted]3

CONC 3.3.6 G

If a communication or a financial promotion names the FCA, PRA or both as the regulator of a firm and refers to matters not regulated by the FCA, PRA or both, the firm should ensure that the communication or financial promotion makes clear that those matters are not regulated by the FCA, PRA or both.

CONC 3.3.7 G

When communicating information, a firm should consider whether omission of any relevant fact will result in information given to the customer being insufficient, unclear, unfair or misleading.

CONC 3.3.8 G

A comparison or contrast to which CONC 3.3.1R(1B) applies may be a comparison or contrast with another person, or with another product or service, whether offered by the firm or by another person.3

CONC 3.3.9 G

A firm should in a financial promotion or other communication which includes a premium rate telephone number indicate in a prominent way the likely total cost of a premium rate call including the price per minute of a call, the likely duration of calls and the total cost a customer would incur if the customer calls for the full estimated duration.Firms should note the effect of the call charges rule in GEN 7.2

[Note: paragraphs 3.9h of CBG and 3.18x (box) of DMG]

Unfair business practices: financial promotions and communications

CONC 3.3.10 G

Examples of practices that are likely to contravene the clear, fair and not misleading rule in CONC 3.3.1 R include:

  1. (1)

    stating or implying that a firm is a lender (where this is not the case);

    [Note: paragraph 3.7e (box) of CBG]

  2. (2)

    misleading a customer as to the availability of a particular credit product;

    [Note: paragraph 3.9p of CBG

  3. (3)

    concealing or misrepresenting the identity or name of the firm;

    [Note: paragraph 3.7g (box) of CBG

  4. (4)

    using false testimonials, endorsements or case studies;

    [Note: paragraph 3.18s of DMG]

  5. (5)

    using false or unsubstantiated claims as to the firm's size or experience or pre-eminence;

    [Note: paragraph 3.18t of DMG]

  6. (6)

    in relation to debt solutions, claiming or implying that a customer will be free of debt in a specified period of time or making statements emphasising a debt-free life or that a debt solution is a stress free or immediate solution;

    [Note: paragraphs 3.18u and 3.18v of DMG]

  7. (7)

    providing online tools, which recommend a particular debt solution as suitable for a customer, such as, budget calculators or advice websites:

    1. (a)

      which do not carry out a sufficiently full assessment of a customer's financial position; or

    2. (b)

      which fail to provide clear warnings to a customer that financial data entered into a tool has to be accurate;

    [Note: paragraph 3.20c of DMG]

  8. (8)

    emphasising any savings available to a customer by proposing to reschedule a customer's debts, without explaining that a lender is not obliged to accept less in settlement of the customer's debts than it is entitled to, nor to freeze interest and charges and that the result may be to increase the total amount payable or the period over which it is to be paid and to impair the customer's credit rating;

    [Note: paragraph 3.18l of DMG]

  9. (9)

    suggesting that a customer'srepayments will be lower under a proposed agreement without also mentioning (where applicable) that the duration of the agreement will be longer or that the total amount payable will be higher.

    [Note: paragraph 5.13 of ILG]

Guidance on misleading introductions

CONC 3.3.11 G

Misleading a customer as to the availability of a particular credit1 product is likely to include stating or implying that the firm will introduce the customer to a provider of a standard personal loan based on repayment by instalments or of an overdraft facility on a current account (for example, a bank or building society) or of a credit card, but instead introducing the customer to a provider of high-cost short-term credit.

[Note: paragraph 3.9p (box) of CBG]

1

CONC 3.4 Risk warning for high-cost short-term credit

[Note: Until the end of 30 June 2014, transitional provisions apply to CONC 3.4: see CONC TP 31]

Risk warnings

CONC 3.4.1 R
  1. (1)

    A firm must not communicate or approve for communication a financial promotion in relation to high-cost short-term credit, unless it contains the following risk warning:

    “Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk”.

  2. (2)

    [deleted]2

  3. (3)

    Instead of the website address in paragraph (1), a firm may include the Money Advice Service’s logo registered community trade mark number EU009695909.

  4. (4)

    The risk warning must be included in a financial promotion in a prominent way.

CONC 3.4.2 G

The Money Advice Service has granted a licence to use the logo referred to in CONC 3.4.1R (3) for the purposes of that rule.1 The terms of the licence are available from the Money Advice Service.

1

CONC 3.5 Financial promotions about credit agreements not secured on land

Application

CONC 3.5.1 R

This section applies:

  1. (1)

    to a financial promotion in relation to consumer credit lending;

  2. (2)

    to a financial promotion in relation to credit broking in relation to regulated credit agreements;

  3. (3)

    to a financial promotion in relation to activities specified in article 36A(1)(a) or (c) of the Regulated Activities Order in relation to what would be regulated credit agreements but for a relevant provision, but only where the firm also carries on such activities in relation to regulated credit agreements;

and in each case, other than to financial promotions to the extent that they relate to agreements secured on land.

Prohibition on financial promotion where goods etc. not sold for cash

CONC 3.5.2 R

A financial promotion must not be communicated where it indicates a firm is willing to provide credit under a regulated restricted-use credit agreement relating to goods or services to be supplied by any person, when at the time the financial promotion is communicated, the firm or any supplier under such an agreement does not hold itself out as prepared to sell the goodsor provide the services (as the case may be) for cash.

[Note: section 45 of CCA]

Content of financial promotions

CONC 3.5.3 R
  1. (1)

    Where a financial promotion indicates3 a rate of interest or an amount relating to the cost of credit whether expressed as a sum of money or a proportion of a specified amount, the financial promotion must also:

    1. (a)

      include a representative example in accordance with CONC 3.5.5 R, and

    2. (b)

      specify a postal address at which the person making the financial promotion may be contacted.

    [Note: regulation 4(1) of CCAR 2010]

  2. (2)

    Paragraph (1)(a) does not apply where the financial promotion:

    1. (a)

      falls within CONC 3.5.7 R; and

    2. (b)

      does not indicate a rate of interest or an amount relating to the cost of credit other than the representative APR.

    [Note: regulation 4(2) of CCAR 2010]

  3. (2A)

    Paragraph (1)(a) also does not apply where the financial promotion relates only to credit agreements in respect of which the APR is 0%.4

  4. (3)

    Paragraph (1)(b) does not apply to financial promotions:

    1. (a)

      communicated by means of television or radio broadcast; or

    2. (b)

      in any form on the premises of a dealer or lender, other than financial promotions in writing which customers are intended to take away; or

    3. (c)

      which include the name and address of a dealer; or

    4. (d)

      which include the name and postal address of a credit broker.

    [Note: regulation 4(1)b of CCAR 2010]

Guidance on showing interest rates and cost of credit

CONC 3.5.4 G
  1. (1)

    A rate of interest for the purpose of CONC 3.5.3R (1) is not limited to an annual rate of interest but would include a monthly or daily rate or an APR. It would also include reference to 0% credit (but where the APR is 0% and CONC 3.5.3R(2A) applies, a representative example is not required)4. An amount relating to the cost of credit would include the amount of any fee or charge, or any repayment of credit (where it includes interest or other charges).3

[Note: paragraph 6.7 of BIS Guidance on regulations implementing the Consumer Credit Directive]

  1. (2)

    If a rule in CONC 3.5 applies to a rate of interest or a charge, and the rate or charge applies for only a limited period, the duration of the period and the rate or amount following that period, if known or ascertainable, should be shown.3

[Note: paragraph 6.13 of BIS Guidance on regulations implementing the Consumer Credit Directive]3

Representative example

CONC 3.5.5 R
  1. (1)

    The representative example in CONC 3.5.3R (1) must comprise the following items of information:

    1. (a)

      the rate of interest, and whether it is fixed or variable or both, expressed as a fixed or variable percentage applied on an annual basis to the amount of credit drawn down;

    2. (b)

      the nature and amount of any other charge included in the total charge for credit;

    3. (c)

      the total amount of credit;

    4. (d)

      the representative APR;

    5. (e)

      in the case of credit in the form of a deferred payment for specific goods, services, land or other things, the cash price and the amount of any advance payment;

    6. (f)

      the duration of the agreement;

    7. (g)

      the total amount payable; and

    8. (h)

      the amount of each repayment of credit.

    [Note: regulation 5(1) of CCAR 2010]

    [Note: article 4 of the Consumer Credit Directive]

  2. (2)

    The items of information required by (1)(a), (b), (c), (e), (f) and (g) must be those which the firmcommunicating or approving the financial promotion reasonably expects at the date on which the financial promotion is made to be representative of credit agreements to which the representative APR applies and which are expected to be entered into as a result of the promotion.

    [Note: regulation 5(2) of CCAR 2010]

  3. (3)

    For (1)(e), the reference in (2) to “credit agreements to which the representative APR applies” is to agreements providing credit for the purchase of specific goods, services, land or other things, to which the representative APR applies.

    [Note: regulation 5(3) of CCAR 2010]

  4. (4)

    For the purposes of (1)(a), where the credit agreement provides for different ways of drawdown with different rates of interest, the rate of interest shall be assumed to be the highest rate applied to the most common drawdown mechanism for the product to which the agreement relates.

    [Note: regulation 5(4) of CCAR 2010]

  5. (5)

    The information required by (1) must be:

    1. (a)

      specified in a clear,3 concise and prominent3 way;

    2. (b)

      accompanied by the words “representative example”;

    3. (c)

      presented together with each item of information being given equal prominence; and

    4. (d)

      given no less3 prominence than:

      1. (i)

        any other information relating to the cost of credit in the financial promotion, except for any statement relating to an obligation to enter into a contract for an ancillary service referred to in CONC 3.5.10 R; and

      2. (ii)

        any indication or incentive of a kind referred to in CONC 3.5.7 R.

    [Note: regulation 5(6) of CCAR 2010]

  6. (6)

    A financial promotion for a credit agreement with no fixed duration is not required to include the duration of the agreement or the total amount payable or the amount of each repayment of credit.

    [Note: regulation 5(1)f of CCAR 2010]

  7. (7)

    A financial promotion for an authorised non-business overdraft agreement is not required to include a representative APR.

    [Note: regulation 5(5) of CCAR 2010]

Guidance on the representative example

CONC 3.5.6 G
  1. (1)

    The representative example in CONC 3.5.5 R should not be limited to being representative of agreements featured in the financial promotion if the firmcommunicating or approving the financial promotion expects other agreements to be entered into as a result of the financial promotion, whether with the firm or with a third party.

    [Note: paragraph 6.8 of BIS Guidance on regulations implementing the Consumer Credit Directive]

  2. (1A)

    Firms are referred to the Glossary definition of representative APR and reminded that they should consider the agreements which they reasonably expect to be entered into (whether by the firm or by another person) as a result of the financial promotion, and ensure that the 51% test in that definition takes account of the APR of each of those agreements. The representative example in CONC 3.5.5R should be representative of agreements to which the representative APR applies.3

  3. (1B)

    The example referred to in (1) is unlikely to be representative if, for example, most customers entering into agreements as a result of the financial promotion are likely to do so for a lower amount of credit than that indicated in the example, or with higher rates of interest or other charges than those indicated in the example.3

  4. (2)

    Where the agreement provides for compounding, the rate of interest in CONC 3.5.5R (1) should generally be the effective annual interest rate and lenders should use the same assumptions to calculate this interest rate as they do for the APR; the assumptions set out in CONC App 1.2. If a firm uses a different rate to calculate the rate of interest in CONC 3.5.5R (1) it must clearly explain this to the customer, so that the customer is clear whether and to what extent the rate used is comparable with rates shown by other lenders.

    [Note: paragraph 6.13 of BIS Guidance on regulations implementing the Consumer Credit Directive]

  5. (3)

    [deleted]3

  6. (4)

    For charges other than interest which are included in the total charge for credit, the financial promotion should in each case make clear the nature of the charge and the amount of the charge if ascertainable or a reasonable estimate of the charge, making clear in that case it is an estimate.

    [Note: paragraph 6.13 of BIS Guidance on regulations implementing the Consumer Credit Directive]

  7. (5)

    The total amount of credit equates to the sum available to the customer to use and does not include charges which are financed by the credit agreement; those are part of the total charge for credit.

  8. (6)

    For showing the cash price, the total cash price of all items should be shown, together with the price of each item individually. For the purposes of the Glossary definition of cash price in this context, a discount will be treated as generally available if most customers paying in cash are likely to be, or would reasonably expect to be, offered or given the discount.3

Other financial promotions requiring a representative APR

CONC 3.5.7 R
  1. (1)

    A financial promotion must include the representative APR if it:

    1. (a)

      states or implies that credit is available to individuals who might otherwise consider their access to credit restricted; or3

      23
    2. (b)

      includes a favourable comparison relating to the credit, whether express or implied, with another person, product or service; or3

    3. (c)

      includes an incentive 3to apply for credit or to enter into an agreement under which credit is provided.

    [Note: regulation 6 of CCAR 2010]3

  2. (2)

    The representative APR must be given no less3 prominence than any of the matters3 in (1).

  3. (3)

    This rule does not apply to a financial promotion:4

    1. (a)

      for an authorised non-business overdraft agreement; or4

    2. (b)

      for a credit agreement in respect of which the APR is 0%; or4

    3. (c)

      for a credit agreement to be entered into by a community finance organisation as lender.4

CONC 3.5.8 G
  1. (1)

    A firm’s trading name, website address or logo could trigger the requirements in CONC 3.5.7R(1).3

  2. (2)

    For the purposes of CONC 3.5.7R(1)(b), a comparison with another person, product or service includes a reference (whether stated or implied) to:3

    1. (a)

      the terms on which, or the way in which, credit is offered or made available; or3

    2. (b)

      the nature or quality or any other aspect of the service relating to the credit that the person offers or provides (or does not offer or provide).3

    The financial promotion does not need to specify a particular person, product or service for there to be a comparison.3

  3. (3)

    A financial promotion does not necessarily include a comparison where it merely refers to a person, product or service in a factual manner, but there will be an implied comparison for the purposes of CONC 3.5.7R(1)(b) if it may reasonably be inferred that a comparison is being made.3

  4. (4)

    A statement about matters such as the speed or ease of processing, considering or granting an application, of entering into an agreement, or of making funds available, may constitute an incentive for the purposes of CONC 3.5.7R(1)(c). This will depend on the context of the statement and the circumstances in which it is made. A statement will be an incentive where it is likely to persuade or influence a customer to apply for credit or to enter into an agreement under which credit is provided, or is presented in a way which is likely to have that effect.3

  5. (5)

    Other examples of things which could be incentives are gifts, special offers, discounts and rewards.3

Annual percentage rate of charge

CONC 3.5.9 R

In a financial promotion:

  1. (1)

    an APR must be shown as “%APR”;

  2. (2)

    where an APR is subject to change it must be accompanied by the word “variable”; and

  3. (3)

    the representative APR must be accompanied by the word “representative”.

[Note: regulation 7 of CCAR 2010]

Ancillary services

CONC 3.5.10 R
  1. (1)

    A financial promotion must include a clear, concise and prominent3 statement in respect of any obligation to enter into a contract for an ancillary service where:

    1. (a)

      the conclusion of that contract is compulsory in order to obtain the credit or to obtain it on the terms and conditions promoted; and

    2. (b)

      the cost of that ancillary service cannot be determined in advance.

    [Note: regulation 8 of CCAR 2010]

  2. (2)

    The statement in (1) must be presented together with any representative APR included in the financial promotion.3

  3. (3)

    This rule does not apply to a financial promotion for an authorised non-business overdraft agreement.

Security

CONC 3.5.11 R

Where a financial promotion concerns a facility for which security is or may be required, the promotion must:

  1. (1)

    state that security is or may be required; and

  2. (2)

    specify the nature of the security.

[Note: regulation 9 of CCAR 2010]

Restricted expressions

CONC 3.5.12 R
  1. (1)

    A financial promotion must not include:

    1. (a)

      the word “overdraft” or any similar expression as describing any agreement for running-account credit, except where an agreement enables a customer to overdraw on a current account;

    2. (b)

      the expression “interest free” or any similar expression indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than he would be liable to pay as a cash purchaser for the like transaction, except where the total amount payable does not exceed the cash price;

    3. (c)

      the expression “no deposit” or any similar expression, except where no advance payments are to be; or3

    4. (d)

      [deleted];3

    5. (e)

      the expression “gift”, “present” or any similar expression, except where there are no conditions which would require the customer to repay the credit or to return the item that is the subject of the claim.

    [Note: regulation 10 of CCAR 2010]

  2. (2)

    A financial promotion must not include for a repayment of credit the expression “weekly equivalent” or any expression to like effect or any expression of any other periodical equivalent, unless weekly repayments or the other periodical payments are provided for under the agreement.

  3. (3)

    In this rule, “cash purchaser” means a person1 who, for money consideration, acquires goods, land or other things or is provided with services under a transaction which is not financed by credit.

    1

Total charge for credit and APR

CONC 3.5.13 R
  1. (1)

    Where a financial promotion is about running-account credit and the credit limit applicable is not yet known on the date the financial promotion is made, but it is known that it will be less than £1,200, the credit limit must be assumed to be an amount equal to that maximum limit.

    [Note: paragraph 1 of schedule to CCAR 2010]

  2. (2)

    The assumption in (1) applies in place of the assumption in CONC App 1.2.5 R for the purpose of calculating the total charge for credit.

Total charge for credit and APR: tolerances for APR

  1. (3)

    For a financial promotion, it is sufficient to show an APR if there is included in the promotion:

    1. (a)

      a rate which exceeds the APR by not more than one; or

    2. (b)

      a rate which falls short of the APR by not more than 0.1; or

    3. (c)

      where applicable, a rate determined in accordance with (4) or (5).

    [Note: paragraph 2 of schedule to CCAR 2010]

Total charge for credit and APR: tolerance where repayments are nearly equal

  1. (4)

    Where an agreement under which all repayments but one are equal and that one repayment does not differ from any other repayment by more whole pence than there are repayments of credit, there may be included in a financial promotion about the agreement a rate found under CONC App 1.2.4 R as if that one repayment were equal to the other repayments to be made under the agreement.

    [Note: paragraph 3 of schedule to CCAR 2010]

Total charge for credit and APR: tolerance regarding interval between relevant date and first repayment

  1. (5)

    Where a credit agreement provides that:

    1. (a)

      three or more repayments are to be made at equal intervals; and

    2. (b)

      the interval between the relevant date and the first repayment is greater than the interval between the repayments;

    a financial promotion about the agreement may include a rate found under CONC App 1.2.4 R as if the interval between the relevant date and the first repayment were shortened so as to be equal to the interval between the repayments.

    [Note: paragraph 4 of schedule to CCAR 2010]

  2. (6)

    The relevant date in (5) is:

    1. (a)

      where a date on which the customer is entitled to require provision of the subject of a credit agreement is specified in or can be determined from the agreement, the earliest such date;

    2. (b)

      in any other case, the date of making the agreement.

CONC 3.6 Financial promotions about credit agreements secured on land

Application

CONC 3.6.1 R

This section applies:

  1. (1)

    to a financial promotion in relation to consumer credit lending in relation to regulated credit agreements secured on land; and

  2. (2)

    to a financial promotion in relation to credit broking in relation to regulated credit agreements secured on land;

and in both cases other than financial promotions to the extent that they relate to qualifying credit.

Definitions

CONC 3.6.2 R

In this section, for a financial promotion relating to credit to be provided under a credit agreement “relevant date” means:

  1. (1)

    in a case where a date is specified in or determinable under the agreement at the date of its making as that on which the customer is entitled to require provision of anything the subject of the agreement, the earliest such date; and

  2. (2)

    in any other case, the date of the making of the agreement.

Prohibition on financial promotion where goods etc not sold for cash

CONC 3.6.3 R

A financial promotion must not be communicated where it indicates a firm is willing to provide credit under a regulated restricted-use credit agreement secured on land relating to goods or services to be supplied by any person, when at the time the financial promotion is communicated, the firm or any supplier under such an agreement does not hold itself out as prepared to sell the goods or provide the services (as the case may be) for cash.

[Note: section 45 of CCA]

Content of financial promotions

CONC 3.6.4 R
  1. (1)

    Where a financial promotion includes any of the amounts referred to in (5) to (7) of CONC 3.6.10 R the promotion must:

    1. (a)

      include all the other items of information (other than any item inapplicable to the particular case) listed in CONC 3.6.10 R; and

    2. (b)

      specify a postal address at which the person making the promotion may be contacted, except in the case of a financial promotion:

      1. (i)

        communicated by means of television or radio broadcast;

      2. (ii)

        in any form on the premises of a lender or dealer (other than a financial promotion in writing which customers are intended to take away);

      3. (iii)

        which includes the name and address of a dealer; or

      4. (iv)

        which includes the name and a postal address of a credit broker.

        [Note: regulation 4(1) of CCAR 2004]

  2. (2)

    The items of information listed in CONC 3.6.10 R must be given equal prominence and must be shown together as a whole.

    [Note: regulation 4(2) of CCAR 2004]

  3. (3)

    Any information in any book, catalogue, leaflet or other document which is likely to vary from time to time must be taken for the purpose of (2) to be shown together as a whole if:

    1. (a)

      it is set out together as a whole in a separate document issued with the book, catalogue, leaflet or other document;

    2. (b)

      the other information in the financial promotion is shown together as a whole in the book, catalogue, leaflet or other document; and

    3. (c)

      the book, catalogue, leaflet or other document identifies the separate document in which the information likely to vary is set out.

    [Note: regulation 4(3) of CCAR 2004]

Statements in relation to security

CONC 3.6.5 R
  1. (1)

    Where a financial promotion concerns a facility for which security is or may be required, the promotion must:

    1. (a)

      state that security is or may be required; and

    2. (b)

      specify the nature of the security.

      [Note: regulation 7(1) of CCAR 2004]

  2. (2)

    Where, in the case of a financial promotion, the security comprises or may comprise a mortgage or charge on a property used by the customer as a dwelling (whether or not the customer’s primary residence)4:

    1. (a)

      except where (c) applies, the financial promotion must contain a warning in the form:

      “YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT”;

    2. (b)

      where the financial promotion indicates that credit is available for the payment of debts due to other lenders, the warning in (a) must be preceded by the words:

      “THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.”

    3. (c)

      where the credit agreement is or would be an agreement of a kind described in (3), the financial promotion must contain a warning in the form:

      “CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT ADVICE”.

      [Note: regulation 7(2) of CCAR 2004]

  3. (3)

    The kinds of agreement in (2)(c) are:

    1. (a)

      any credit agreement under which no instalment repayments secured by the mortgage on the customer's home, and no payment of interest on the credit (other than interest charged when all or part of the credit is repaid voluntarily by the customer), are due or capable of becoming due while the customer continues to occupy the mortgaged land as the customer's main residence; and

    2. (b)

      any credit agreement:

      1. (i)

        which is secured by a mortgage which the lender cannot enforce by taking possession of or selling (or concurring with any other person in selling) the mortgaged land or any part of it while the customer continues to occupy it as the customer's main residence; and

      2. (ii)

        under which, although interest payments may become due, no full or partial repayment of the credit secured by the mortgage is due or capable of becoming due while the customer continues to occupy the mortgaged land as the customer's main residence.

        [Note: regulation 7(3) of CCAR 2004]

  4. (4)

    Where a financial promotion is for a mortgage or other loan secured on property and repayments are to be made in a currency other than sterling, the financial promotion must contain a warning in the form:

    “CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT OF YOUR DEBT”.

    [Note: regulation 7(4) of CCAR 2004]

  5. (5)

    The warnings provided for in (2) and (4):

    1. (a)

      must be given greater prominence in a financial promotion than is given to:

      1. (i)

        any rate of charge other than the typical APR; and

      2. (ii)

        any indication or incentive of a kind referred to in CONC 3.6.6R (1); and

    2. (b)

      must be given no less prominence in a financial promotion than is given to any of the items listed in CONC 3.6.10 R that appear in the financial promotion.

      [Note: regulation 7(6) of CCAR 2004]

  6. (6)

    Paragraphs (2), (3), (4) and (5) do not apply in the case of a financial promotion which:

    1. (a)

      is communicated by means of television or radio broadcast in the course of programming the primary purpose of which is not financial promotion; or

    2. (b)

      is communicated by exhibition of a film (other than exhibition by television broadcast); or

    3. (c)

      contains only the name of the firmcommunicating the financial promotion.

      [Note: regulation 7(8) of CCAR 2004]

Annual percentage rate of charge

CONC 3.6.6 R
  1. (1)

    A financial promotion must specify the typical APR if the promotion:

    1. (a)

      specifies any other rate of charge;

    2. (b)

      includes any of the items of information listed in CONC 3.6.10R (5) to (7);

    3. (c)

      indicates in any way, whether expressly or by implication,3 including by means of the name given to a business or of an address used by a business for the purposes of electronic communication, that:

      1. (i)

        credit is available to persons who might otherwise consider their access to credit restricted; or

      2. (ii)

        any of the terms on which credit is available is more favourable (either for a limited period or generally) than corresponding terms applied in any other case or by any otherlender;3 or

        3
      3. (iii)

        the way in which the credit is offered is more favourable (either for a limited period or generally) than corresponding ways used in any other case or by any otherlender;3 or

        3
    4. (d)

      includes any incentive (including but not limited to, gifts, special offers, discounts and rewards) to apply for credit or to enter into an agreement under which credit is provided;

      [Note: regulation 8(1) of CCAR 2004]

    5. (e)

      includes an incentive (in the form of a statement about the speed or ease of, processing, considering or granting an application or of making funds available) to apply for credit or to enter into an agreement under which credit is provided.

  2. (2)

    A financial promotion may not indicate the range of APRs charged where credit is provided otherwise than by specifying, with equal prominence, both:

    1. (a)

      the APR which the firmcommunicating or approving the financial promotion reasonably expects, at the date on which the promotion is communicated or approved, would be the lowest APR at which credit would be provided under not less than 10% of the agreements which will be entered into as a result of that promotion; and

    2. (b)

      the APR which the firmcommunicating or approving the financial promotion reasonably expects, at that date, would be the highest APR at which credit would be provided under any of the agreements which will be entered into as a result of that promotion.

      [Note: regulation 8(2) of CCAR 2004]

  3. (3)

    An APR must be shown as “%APR”.

    [Note: regulation 8(3) of CCAR 2004]

  4. (4)

    Where an APR is subject to change it must be accompanied by the word “variable”.

    [Note: regulation 8(4) of CCAR 2004]

  5. (5)

    The typical APR in a financial promotion must be:

    1. (a)

      accompanied by the word “typical”;

    2. (b)

      presented together with any of the items listed in CONC 3.6.10 R that are included in the promotion;

    3. (c)

      given greater prominence in the promotion than:

      1. (i)

        any other rate of charge;

      2. (ii)

        any items listed in CONC 3.6.10 R; and

      3. (iii)

        any indication or incentive of a kind referred to in (1); and

    4. (d)

      in the case of a promotion in printed or electronic form which includes any of the items listed in CONC 3.6.10 R, shown in characters at least one and a half times the size of the characters in which those items appear.

      [Note: regulation 8(5) of CCAR 2004]

  6. (6)

    In the case of a financial promotion relating to a borrower-lender agreement enabling the customer to overdraw on a current account under which the lender is the Bank of England or an authorised person4 with permission4 to accept deposits, there may be substituted for the typical APR a reference to the statement of:

    1. (a)

      a rate, expressed to be a rate of interest, being a rate determined as the rate of the total charge for credit calculated on the assumption that only interest is included in the total charge for credit, and

    2. (b)

      the nature and amount of any other charge included in the total charge for credit.

      [Note: regulation 8(6) of CCAR 2004]

CONC 3.6.7 G

Whether or not a reference to speed or ease in CONC 3.6.6R (1)(e) constitutes an incentive to apply for credit or enter into an agreement under which credit is provided would depend upon the circumstances, including whether it is likely to persuade or influence a customer to take those steps or is merely a factual statement about the product or service.

Restricted expressions

CONC 3.6.8 R
  1. (1)

    A financial promotion must not include:

    1. (a)

      the word “overdraft” or any similar expression as describing any agreement for running-account credit, except where the agreement enables a customer to overdraw on a current account;

    2. (b)

      the expression “interest free” or any similar expression indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than he would be liable to pay as a cash purchaser for the like transaction, except where the total amount payable by the customer does not exceed the cash price;

    3. (c)

      the expression “no deposit” or any similar expression, except where no advance payments are to be made;

    4. (d)

      the expression “loan guaranteed” or “pre-approved” or “no credit checks” or any similar expression, except where the agreement is free of any conditions regarding the credit status of the customer;

    5. (e)

      the expression “gift”, “present” or any similar expression, except where there are no conditions which would require the customer to repay the credit or return the item that is the subject of the claim.

    [Note: regulation 9 of CCAR 2004]

  2. (2)

    A financial promotion must not include for a repayment of credit the expression “weekly equivalent” or any expression to like effect or any expression of any other periodical equivalent, unless weekly repayments or the other periodical payments are provided for under the agreement.

  3. (3)

    In this rule “cash purchaser” means a person2 who for money consideration acquires goods, land or other things or is provided with services, under a transaction which is not financed by credit.

    2

Total charge for credit and any APR: assumptions about running account credit

CONC 3.6.9 R
  1. (1)

    In the case of a financial promotion about running-account credit, the following assumptions have effect for the purpose of calculating the total charge for credit and any APR, notwithstanding the terms of the transaction advertised and in place of any assumptions in CONC App 1.1.11 R to CONC App 1.1.18 R that might otherwise apply:

    1. (a)

      the amount of the credit to be provided must be taken to be £1,500 or, in a case where credit is to be provided subject to a credit limit of less than £1,500, an amount equal to that limit;

    2. (b)

      it must be assumed that the credit is provided for a period of one year beginning with the relevant date;

    3. (c)

      it must be assumed that the credit is provided in full on the relevant date;

    4. (d)

      where the rate of interest will change at a time provided in the transaction within a period of three years beginning with the relevant date, the rate must be taken to be the highest rate at any time obtaining under the transaction in that period;

    5. (e)

      where the agreement provides credit to finance the purchase of goods, services, land or other things and also provides one or more of:

      1. (i)

        cash loans;1

      2. (ii)

        credit to refinance existing indebtedness of the customer, whether to the lender or another person; and

      3. (iii)

        credit for any other purpose;

      and either or both different rates of interest and different charges are payable for the credit provided for all or some of these purposes, it must be assumed that the rate of interest and charges payable for the whole of the credit are those applicable to the provision of credit for the purchase of goods, services, land or other things; and

    6. (f)

      it must be assumed that the credit is repaid:

      1. (i)

        in twelve equal instalments; and

      2. (ii)

        at monthly intervals, beginning one month after the relevant date.

        [Note: paragraph 1 of schedule 1 to CCAR 2004]

Total charge for credit and any APR: tolerances in disclosure of an APR

  1. (2)

    For the purposes of CONC 3.6, it is sufficient compliance with the requirement to show an APR if there is included in the financial promotion:

    1. (a)

      a rate which exceeds the APR by not more than one; or

    2. (b)

      a rate which falls short of the APR by not more than 0.1;

    or in a case to which (3) or (4) applies, a rate determined in accordance with those sub-paragraphs or whichever of them applies to that case.

    [Note: paragraph 2 of schedule 1 to CCAR 2004]

Total charge for credit and any APR: tolerance where repayments are nearly equal

  1. (3)

    In the case of an agreement under which all repayments but one are equal and that one repayment does not differ from any other repayment by more whole pence than there are repayments of credit, there may be included in a financial promotion about the agreement a rate found under CONC App 1.1.9 R as if that one repayment were equal to the other repayments to be made under the agreement.

    [Note: paragraph 3 of schedule 1 to CCAR 2004]

Total charge for credit and any APR: tolerance of interval between relevant date and first repayment

  1. (4)

    In the case of an agreement under which:

    1. (a)

      three or more repayments are to be made at equal intervals; and

    2. (b)

      the interval between the relevant date and the first repayment is greater than the interval between the repayments;

    a financial promotion about the agreement may include a rate found under CONC App 1.1.9 R as if the interval between the relevant date and the first repayment were shortened so as to be equal to the interval between repayments.

    [Note: paragraph 4 of schedule 1 to CCAR 2004]

Information that CONC 3.6.4R(1) may require to be included in a financial promotion4

CONC 3.6.10 R
  1. (1)

    The amount of credit which may be provided under a credit agreement or an indication of one or both of the maximum amount and the minimum amount of credit which may be provided.

    [Note: paragraph 1 of schedule 2 to CCAR 2004]

Deposit of money in an account

  1. (2)

    A statement of any requirement to place on deposit any sum of money in any account with any person.

    [Note: paragraph 2 of schedule 2 to CCAR 2004]

Cash price

  1. (3)

    In the case of a financial promotion about credit to be provided under a borrower-lender-supplier agreement, where the financial promotion specifies goods, services, land or other things having a particular cash price, the acquisition of which from an identified dealer may be financed by the credit, the cash price of such goods, services, land or other things.

[Note: paragraph 3 of schedule 2 to CCAR 2004]

Advance payment

  1. (4)

    A statement as to whether an advance payment is required and, if so, the amount or minimum amount of the payment expressed as a sum of money or a percentage.

    [Note: paragraph 4 of schedule 2 to CCAR 2004]

Frequency, number and amount of repayments of credit

  1. (5)
    1. (a)

      In the case of a financial promotion about running-account credit, a statement of the frequency of the repayments of credit under the transaction and of the amount of each repayment stating whether it is a fixed or minimum amount, or a statement indicating the manner in which the amount will be determined.

    2. (b)

      In the case of other financial promotions, a statement of the frequency, number and amounts of repayments of credit.

    3. (c)

      The amount of any repayment under this sub-paragraph may be expressed as a sum of money or as a specified proportion of a specified amount (including the amount outstanding from time to time).

      [Note: paragraph 5 of schedule 2 to CCAR 2004]

    Other payments and charges

  2. (6)
    1. (a)

      Subject to (b) and (c), a statement indicating the description and amount of any other payments and charges which may be payable under the agreement promoted in the financial promotion.

    2. (b)

      Where the liability of the customer to make any payment cannot be ascertained at the date the financial promotion is communicated, a statement indicating the description of the payment in question and the circumstances in which the liability to make it will arise.

    3. (c)

      Paragraphs (a) and (b) do not apply to any charge payable under the transaction to the lender or any other person on behalf of the lender upon failure by the customer or a relative of the customer to do or refrain from doing anything which the customer is required to do or refrain from doing, as the case may be.

      [Note: paragraph 6 of schedule 2 to CCAR 2004]

    Total amount payable by the customer

  3. (7)

    In the case of a financial promotion about fixed-sum credit to be provided under a credit agreement which is repayable at specified intervals or in specified amounts and other than cases under which the sum of the payments within (a) to (c) is not greater than the cash price referred to in (3), the total amount payable, being the total of:

    1. (a)

      advance payments;

    2. (b)

      the amount of credit repayable by the customer, and

    3. (c)

      the amount of the total charge for credit.

    [Note: paragraph 7 of schedule 2 to CCAR 2004]

CONC 3.7 Financial promotions and communications: credit brokers

Application

CONC 3.7.1 R

This section applies to a financial promotion or a communication with a customer in relation to credit broking in relation to a regulated credit agreement.

CONC 3.7.2 R

CONC 3.7.4 G also applies to a financial promotion or a communication with a customer in relation to the activities specified in article 36A(1)(a) or (c) of the Regulated Activities Order in relation to a credit agreement that would be a regulated credit agreement but for the relevant provisions.

CONC 3.7.2A R

2 CONC 3.7.5 R to CONC 3.7.8 G:

  1. (1)

    apply to a financial promotion or a communication with a customer in relation to credit broking whether or not it is in relation to a regulated credit agreement; but

  2. (2)

    do not apply to a financial promotion or a communication with a customer which clearly indicates that it is made solely in respect of credit broking in relation to a credit agreement secured by a legal or equitable mortgage on land.

2Credit brokers’ registered name, and status2

CONC 3.7.3 R

A firm must, in a financial promotion or a document which is intended for individuals which relates to its credit broking, indicate the extent of its powers and in particular whether it works exclusively with one or more lenders or works independently.

[Note: section 160A(3) of CCA]

[Note: article 21(a) of the Consumer Credit Directive]

CONC 3.7.4 G

A firm should in a financial promotion or in a communication with a customer:

  1. (1)

    make clear, to the extent an average customer of the firm would understand, the nature of the service that the firm provides;

    [Note: paragraphs 3.7e and 4.8b of CBG]

  2. (2)

    indicate to the customer in a prominent way the existence of any financial arrangements with a lender that might impact upon the firm's impartiality in promoting a credit1 product to a customer;

    [Note: paragraphs 2.2, 6th bullet and 4.6 of CBG]

    1
  3. (3)

    only describe itself as independent if it is able to provide access to a representative range of credit1 products from the relevant product market on competitive terms and is not constrained in providing such access, for example, because of one or more agreements with lenders; and

    [Note: paragraph 4.5 of CBG]

    1
  4. (4)

    ensure that any disclosure about the extent of its independence is prominent and in accordance with the clear, fair not misleading rule in CONC 3.3.1 R, clear and easily comprehensible.

    [Note: paragraph 4.6 of CBG]

CONC 3.7.5 R

2A firm must ensure that a financial promotion or a communication with a customer specifies the legal name of the firm as it appears in the Financial Services Register and not merely a trading name.

CONC 3.7.6 G

2 CONC 3.7.5 R requires all financial promotions and communications with customers to specify the legal name of the firm: the rule does not prohibit the use of trading names, but does require the legal name to be given in addition to any trading name used. If the firm is a company registered under the Companies Act 2006, the firm's legal name will be the name by which it is registered.

CONC 3.7.7 R
  1. (1)

    2A firm which is a credit broker and not a lender must ensure that any financial promotion states prominently that the firm is a credit broker and that it is not a lender.

  2. (2)

    A firm which is both a credit broker and a lender must ensure that any financial promotion that solely promotes its services as a credit broker states prominently that the financial promotion is promoting the firm's services as a credit broker and not its services as a lender.

CONC 3.7.8 G

2For the purposes of CONC 3.7.7 R, a statement will not be treated as prominent unless it is presented, in relation to other content of the financial promotion, in such a way that it is likely that the attention of the average person to whom the financial promotion is directed would be drawn to it.

CONC 3.7A Financial promotions and communications: P2P agreements

Application

CONC 3.7A.1 R

1This section applies to a firm with respect to operating an electronic system in relation to lending.

Status

CONC 3.7A.2 R
  1. (1)

    A firm must, in any relevant communication, indicate the extent of its powers, in particular whether it works exclusively with one or more lenders (including, for example, if it works exclusively with lenders who are participants in the electronic system that the firm operates) or whether it works as an independent broker.

    [Note: article 21(a) of the Consumer Credit Directive]

  2. (2)

    In this rule, a “relevant communication” means a financial promotion or a document which:

    1. (a)

      is intended for borrowers or prospective borrowers; and

    2. (b)

      relates to a P2P agreement:

      1. (i)

        that is, or would be, a regulated credit agreement; and

      2. (ii)

        in respect of which the lender is, or would be, acting by way of business.

CONC 3.8 Financial promotions and communications: lenders

Application

CONC 3.8.1 R

This section applies to a financial promotion or a communication with a customer in relation to consumer credit lending.

Unfair business practices

CONC 3.8.2 R

A firm must not in a financial promotion or a communication with a customer:

  1. (1)

    provide an application for credit with a pre-completed amount of credit which is not based on having carried out a creditworthiness assessment or an assessment required by CONC 5.2.2R (1); or

    [Note: paragraph 5.3 of ILG]

  2. (2)

    state or imply1 that providing credit is dependent solely upon the value of the equity in property on which the agreement is to be secured; or

    [Note: paragraph 5.4 of ILG]

  3. (3)

    promote credit where the firm knows, or has reason to believe, that the agreement would be unsuitable for that customer in the light of the customer's financial circumstances or, if known, intended use of the credit.

    [Note: paragraph 5.5 of ILG]

CONC 3.8.3 G

An agreement is likely to be unsuitable for the purposes of CONC 3.8.2R (3) including in the following situations where a firm:

  1. (1)

    promotes, suggests or advises taking out a secured loan or to take out a secured loan to replace or convert an unsecured loan when it is clearly not in that person's best interests to do so at that time; or

  2. (2)

    promotes, suggests or advises taking out high-cost short-term credit which would be expensive as a means of longer term borrowing, as being suitable for sustained borrowing over a longer period.

    [Note: paragraph 5.5 (box) of ILG]

CONC 3.8.4 G

For the purposes of CONC 3.8.2R (3) the unsuitability of an agreement does not apply to the question of whether a customer should enter into a regulated credit agreement at all.

[Note: paragraph 5.5 (box) of ILG]

CONC 3.9 Financial promotions and communications: debt counsellors and debt adjusters

Application

CONC 3.9.1 R

This section applies to a financial promotion or a communication with a customer in relation to debt counselling and to debt adjusting.

Financial promotions and communications

CONC 3.9.2 G
  1. (1)

    The clear, fair and not misleading rule in CONC 3.3.1 R applies to a communication with a customer or the communication or approval for1communication of a financial promotion in relation to debt counselling or debt adjusting and in relation to a communication with a customer in relation to providing credit information services.

  2. (2)

    In the light of the complexity of debt counselling, it is unlikely that media which provide restricted space for messages would be a suitable means of making financial promotions about debt solutions.

Contents of financial promotions and communications

CONC 3.9.3 R

A firm must ensure that a financial promotion or a communication with a customer (to the extent a previous communication to the same customer has not included the following information) includes:

  1. (1)

    a statement of the services the firm offers;

  2. (2)

    a statement of any relationship with a business associate which is relevant to the services offered in the promotion;

    [Note: paragraph 2.5a of DMG]

  3. (3)

    a statement setting out the level of fees charged for the firm's services, how they are calculated, what service they cover and where it is not possible to state an exact amount, a reasonable estimate of the anticipated fees, or the average level of its fees, for the service in question;

    [Note: paragraphs 2.5c and 3.18f of DMG]

  4. (4)

    a statement of whether any aspect of the services is provided by a third party or at extra cost;

    [Note: paragraphs 2.5a and 3.18f of DMG]

  5. (5)

    a statement that a customer may be eligible under the Financial Ombudsman Service1 and referring by a link or otherwise to the information the firm is required to publish under DISP 1.2.1R (1);

    [Note: paragraph 2.5b of DMG]

  6. (6)

    where this is the case, a statement that the firm's service is profit-seeking;

    [Note: paragraphs 2.5c and 3.18a of DMG]

  7. (7)

    where this is the case, a statement that the firm's service is offered in return for payment from the customer;

    [Note: paragraphs 2.5c and 3.18a of DMG]

  8. (8)

    other than for a not-for-profit debt advice body, a reference to impartial information and to sources of assistance from not-for-profit debt advice bodies;

    [Note: paragraph 2.5d of DMG]

  9. (9)

    where the financial promotion or communication sets out detail of how a customer might resolve debt problems by explaining options, the most important actual or potential advantages, disadvantages and risk of each option, including those of the debt solution offered by the firm;

    [Note: paragraphs 2.5d and 3.18h of DMG]

  10. (10)

    a statement setting out the likely adverse effect of entering into the debt solution in question on the customer's credit rating;

    [Note: paragraph 3.18g of DMG]

  11. (11)

    a statement setting out that evidence of entering into an individual voluntary arrangement, a debt relief order or a protected trust deed will be entered on a public register;

    [Note: paragraph 3.18g of DMG]

  12. (12)

    where applicable, a statement setting out that a debt solution is only available in a particular country of the UK;

    [Note: paragraph 3.18i of DMG]

  13. (13)

    where entry into a debt solution with the firm will lead to a period when payments to a customer'slenders or owners2 (in whole or in part) are not made or are retained by the firm, a warning of the likelihood of falling into arrears or increasing arrears and an explanation of when distributions would be made to lenders or owners2;

    [Note: paragraph 3.18n of DMG]

  14. (14)

    a statement of the risks of entering into an individual voluntary arrangement or a protected trust deed, as the case may be, including of the following risks:

    1. (a)

      if the arrangement or deed fails, the risk of bankruptcy;

    2. (b)

      homeowners may need to release equity from the value of their homes to pay off debts, and that a remortgage may attract higher interest rates or, if no remortgage is available, an individual voluntary arrangement may be extended for 12 months;

    3. (c)

      there are restrictions on the expenditure of a person who enters into an individual voluntary arrangement or a protected trust deed;

    4. (d)

      the customer'slenders or owners2 may not approve the individual voluntary arrangement or the protected trust deed; and

    5. (e)

      only unsecured debts included within the individual voluntary arrangement or protected trust deed may be discharged at the end of the period and unsecured debts not included remain outstanding; and

      [Note: paragraph 3.18o of DMG]

  15. (15)

    a statement that where another option for dealing with a customer's debts is available, that another option is available and may be suitable for the customer.

    [Note: paragraph 3.18r of DMG]

CONC 3.9.4 G

In CONC 3.9.3R (8) making reference to impartial sources of information should include making customers aware of publications concerning dealing with creditors published by the Insolvency Service (England and Wales), the Department of Enterprise, Trade and Investment (Northern Ireland) or debt advice published by the Scottish Government.

CONC 3.9.4A G

4 Firms are reminded of:

  1. (1)

    the guidance in CONC 3.3.10G(6) to (8) in relation to debt solutions; and

  2. (2)

    the rule in CONC 8.2.4R which requires firms to notify the customer that free debt counselling, debt adjusting and providing of credit information services is available and that the customer can find out more by contacting the Money Advice Service.

CONC 3.9.5 R

A financial promotion or a communication with a customer by a firm must not:

  1. (1)

    falsely claim or imply that the help and debt advice is provided on a free, impartial or independent basis, where the firm has a profit-seeking motive;

    [Note: paragraph 3.18b of DMG]

  2. (2)

    falsely claim or imply4 in any way that the firm is, or represents, a charitable or not-for-profit body or government or local government organisation;

    [Note: paragraph 3.18c of DMG]

  3. (3)

    promote a claims management service (within the meaning of section 4 of the Compensation Act 2006) as a way of managing a customer's debts;

    [Note: paragraph 3.18k of DMG]

  4. (4)

    claim or imply that the firm can guarantee a favourable outcome in negotiations with a lender or owner2 concerning the customer's debts;

    [Note: paragraph 3.18m of DMG]

  5. (5)

    unfairly request, suggest or direct a customer to call the firm using a premium rate telephone number.

    [Note: paragraph 3.18w of DMG]

CONC 3.9.6 G

An example of unfairly directing a customer to a premium rate telephone number may be to direct a person wishing to complain to such a number.

Contents of financial promotions and communications3

CONC 3.9.6A G

Firms should note the effect of the call charges rule in GEN 7.3

On-line promotion of debt solutions

CONC 3.9.7 R

A firm must not:

  1. (1)

    unless it is a not-for-profit debt advice body or a person4 who will provide such services, operate a look alike website designed to attract customers seeking free, charitable, not-for-profit or governmental or local governmental debt advice; or

    [Note: paragraph 3.20a of DMG]

  2. (2)

    seek to use internet search tools or search engines so as to mislead a customer into visiting its website when the customer is seeking free, charitable, not-for-profit or governmental or local governmental debt advice.

    [Note: paragraph 3.20b of DMG]

CONC 3.10 Financial promotions not in writing

Application

CONC 3.10.1 R

This section applies:

  1. (1)

    to a financial promotion in relation to consumer credit lending, credit broking, debt counselling, debt adjusting, operating an electronic system in relation to lending1in relation to prospective borrowers or borrowers1under P2P agreements;

    1
  2. (2)

    in relation to the communication of a financial promotion that is not in writing.

Promotions that are not in writing

CONC 3.10.2 R

A firm must not communicate a solicited or unsolicited financial promotion that is not in writing, to a customer outside the firm's premises, unless the personcommunicating it:

  1. (1)

    only does so at an appropriate time of the day; and

  2. (2)

    identifies that person and the firm represented at the outset and makes clear the purpose of the communication.

    [Note: paragraphs 3.9d of CBG and 3.12b of DMG]

CONC 3.10.3 G

2 Firms are reminded that:

  1. (1)

    section 49 of the CCA makes it a criminal offence to canvass borrower-lender agreements, for example cash loans, off trade premises (within the meaning of section 48 of the CCA); and

  2. (2)

    section 154 of the CCA makes it a criminal offence to canvass off trade premises credit broking of a kind specified by article 36A(1)(a) to (c) of the Regulated Activities Order, debt adjusting, debt counselling or providing credit information services (within the meaning of section 153 of the CCA).

CONC 3.11 Not approving certain financial promotions

CONC 3.11.1 R

Requirement not to approve certain financial promotions

CONC 3.11.2 R

A firm must not approve a financial promotion to be made in the course of a personal visit, telephone conversation or other interactive dialogue.

CONC 3.11.3 G

CONC 3.11.2 R does not prevent the communication by a firm itself (i.e. a firm with a permission) of a financial promotion. A firm's approval of a financial promotion concerns approval for the communication of the promotion by an unauthorised person which is prevented by CONC 3.11.2 R.