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CONC 4.4 Pre-contractual requirements: credit brokers

Application

CONC 4.4.1R

This section applies to a firm carrying on credit broking in relation to a regulated credit agreement.

CONC 4.4.1AR

1 CONC 4.4.3 R applies to a firm carrying on credit broking whether or not it is in relation to a regulated credit agreement.

Pre-contractual requirements

CONC 4.4.2R
  1. (1)

    A firm must disclose to the customer the fee, if any, payable by a customer to the firm for its services.

    [Note: section 160A(4) of CCA]

  2. (2)

    Any fee to be paid by the customer to the firm must be agreed between the customer and the firm, and that agreement must be recorded in writing or other durable medium before a regulated credit agreement is entered into.

    [Note: section 160A(4) of CCA]

  3. (3)

    A firm must disclose to the lender the fee, if any, for its activity payable by the customer for the purpose of enabling the lender to calculate the annual percentage rate of charge for the credit agreement.

    [Note: section 160A(5) of CCA]

  4. (4)

    A firm must disclose to the customer how and when any fee for its service is payable and in what circumstances a refund may be payable, including how and when a refund is available under section 155 of the CCA.

    [Note:paragraphs 2.2 and 4.17b of CBG]

[Note: article 21(b) and (c) of the Consumer Credit Directive]

1Credit broking information notice

CONC 4.4.3R
  1. (1)

    1A firm must not:

    1. (a)

      request, claim, demand, initiate or take payment of a charge from a customer, or from the customer's payment account, in connection with services it has provided or is to provide; or

    2. (b)

      if the purpose, or one of the purposes, is to collect such a charge from a customer, invite or induce a customer to provide information in relation to a payment card or instrument that would enable a payment from the customer's payment account to be initiated by or through the firm or a third party or facilitate the provision of that information by a customer;

    unless that firm has met the conditions in both (2) and (3) in respect of that charge.

  2. (2)

    The first condition referred to in (1) is that the firm has sent a notice on paper or in another durable medium to the customer setting out the following clearly, concisely and in plain language (in this rule and CONC 4.4.5 G referred to as the “information notice”):

    1. (a)

      the legal name of the firm as it appears in the Financial Services Register;

    2. (b)

      if the firm is not a lender, a statement that the firm is a credit broker and that it is not a lender;

    3. (c)

      if the firm is also a lender, a statement that the firm is acting as a credit broker and that it is not acting as a lender;

    4. (d)

      a statement that the customer will be required, or (where relevant) may be required, to pay a charge in connection with the firm's services;

    5. (e)

      the amount of the charge, or, where that amount is not ascertainable at the time the notice is sent, the basis on which it will be calculated; and

    6. (f)

      when and by what method the firm will initiate or take payment of the charge.

  3. (3)

    The second condition referred to in (1) is that the firm has received from the customer a reply to the information notice (in this rule and CONC 4.4.5 G referred to as the “customer confirmation”) on paper or in another durable medium in which the customer acknowledges receipt of the information notice and confirms that he is aware of its contents.

  4. (4)

    The information notice may also contain the firm's trading name, address and other contact details but must not contain any other statements or information additional to those required by (2).

  5. (5)

    For the purposes of this rule:

    1. (a)

      references to “charge” include any fee, charge or financial consideration however described;

    2. (b)

      it is immaterial whether the charge is payable to the firm or to a third party.

  6. (6)

    The firm must keep a record of:

    1. (a)

      each information notice; and

    2. (b)

      each customer confirmation.

CONC 4.4.4R

1CONC 4.4.3 R does not apply where:

  1. (1)

    the customer indicates to the firm that he wishes to enter into a credit agreement secured by a legal or equitable mortgage on land;

  2. (2)

    the firm makes it clear to the customer that it is willing to carry on credit broking for that customer only in relation to credit agreements secured by a legal or equitable mortgage on land; and

  3. (3)

    the firm does not indicate (by express words or otherwise) that it is willing to carry on credit broking for that customer in relation to credit agreements other than credit agreements secured by a legal or equitable mortgage on land.

CONC 4.4.5G
  1. (1)

    1CONC 4.4.3 R prohibits a firm from asking a customer for any payment details, including the card number and security code of a debit card or a credit card, or using those payment details, without first sending an information notice to the customer and receiving a customer confirmation.

  2. (2)

    CONC 4.4.3 R applies in respect of any sum due from a customer, however it is described and irrespective of whether it is payable to the firm or a third party (for example, a firm cannot avoid the application of this rule by describing a charge as a “membership fee” or a “web registration fee”). The fact that a fee or charge may be financed by credit does not take the fee or charge outside the rule.

  3. (3)

    The information notice must not contain anything other than the statements and information required by CONC 4.4.3R (2), except for the firm's trading name, address and other contact details. It should set out the required information clearly and concisely, in plain language. The information notice must be sent to the customer in a durable medium, for example on paper, as an email, or as an attachment to an email: it is insufficient to make the notice available on a website or to email a link to a webpage that contains the relevant information and statements.

  4. (4)

    The firm should not ask for or take the customer's payment details until it has received the customer confirmation. This means, for example, that firms should construct their websites so that customers cannot access any webpage that enables them to input their payment details before they have received the information notice and given the customer confirmation.

  5. (5)

    CONC 4.4.3 R applies to each firm in a chain of credit brokers separately. If firm A introduces the customer to firm B (where B is a credit broker), any information notice given by A cannot cover fees which B might charge: B will have to issue its own information notice to the customer, and the customer will have to provide a separate customer confirmation, before B can ask for or make use of the customer's payment details.

  6. (6)

    CONC 4.4.3 R does not apply to credit broking that relates only to credit agreements secured on land.