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Main bits of Proposed Amendments to the Consumer Credit sourcebook (CONC)
Cost caps: entering into agreements: Total cost cap
5A.2.2 R A firm must not enter into an agreement for high-cost short-term credit that
provides for the payment by the borrower of one or more charges that, alone
or in combination with any other charge under the agreement or a connected
agreement, exceed or are capable of exceeding the amount of credit
provided under the agreement.
Cost caps: entering into agreements: Initial cost cap
5A.2.3 R A firm must not enter into an agreement for high-cost short-term credit that
provides for the payment by the borrower of one or more charges that, alone
or in combination with any other charge under the agreement or a connected
agreement, exceed or are capable of exceeding 0.8% of the amount of credit
provided under the agreement calculated per day from the date on which the
borrower draws down the credit until the date on which repayment of the
credit is due under the agreement, but if the date of repayment is postponed
by an indulgence or waiver, the date to which it is postponed.
5A.2.4 R A reference to a charge in CONC 5A.2.3R (Initial cost cap) excludes a
charge to which CONC 5A.2.11R (Default cap) applies.
5A.2.5 G (1) The initial cost cap is calculated on a daily basis. However, a charge
or charges that may be provided for in an agreement in compliance
with this cap can amount to 0.8% of the credit provided (determined
in accordance with CONC 5A.2.6R to 5A.2.8G) multiplied by the
number of days from the date on which the borrower draws down the
credit until the date indicated in CONC 5A.2.3R.
(2) Where credit is drawn down in tranches or is repaid in instalments,
the calculation of the initial cost cap takes into account the different
amounts of credit outstanding and the different durations for which
the credit is provided.
Determining the amount of credit provided
5A.2.6 R The amount of credit provided under an agreement for high-cost short-term
credit for the purposes of CONC 5A.2.2R (Total cost cap) is the lesser of:
(1) the amount of credit that the lender actually advances under the
agreement; or
(2) the credit limit.
5A.2.7 R The amount of credit provided under an agreement for high-cost short-term
credit for the purposes of CONC 5A.2.3R (Initial cost cap) is the amount of
credit outstanding on the day in question under the agreement, disregarding
the effect of the borrower discharging all or part of the borrower’s
indebtedness in accordance with section 94(1) of the CCA (right to complete
payments ahead of time) by repayment of credit before the date provided for
in the agreement.
5A.2.8 G For these purposes, where a lender allows a borrower to make a number of
drawdowns of credit (which may be expressed to be possible up to a
specified credit limit) but only with the lender’s consent to each respective
drawdown, each drawdown is a separate agreement for high-cost short-term
credit and this chapter applies to each drawdown as a separate agreement
accordingly.
Refinancing
5A.2.9 R A firm must not enter into an agreement for high-cost short-term credit that
replaces an earlier agreement for high-cost short-term credit if the
replacement agreement provides for the payment by the borrower of one or
more charges that, taken together with the charges under the earlier
agreement or a connected agreement (which is connected to either the earlier
or the replacement agreement), exceed or are capable of exceeding the
higher of the amount of credit provided (determined in accordance with
CONC 5A.2.6R to 5A.2.8G) under the replacement agreement or the earlier
agreement.
5A.2.10 R A firm must not enter into an agreement for high-cost short-term credit that
replaces an earlier agreement for high-cost short-term credit if the
replacement agreement provides for the payment by the borrower of one or
more charges in connection with a breach of the agreement by the borrower
that, taken together with such charges provided for by the earlier agreement,
Default cap
5A.2.11 R A firm must not enter into an agreement for high-cost short-term credit if:
(1) it provides for one or more charges payable by the borrower in
connection with a breach of the agreement by the borrower, which
alone or in combination (and whether in relation to one breach or
cumulatively in relation to multiple breaches of the agreement) exceed
or are capable of exceeding £15; or
(2) it provides for the payment by the borrower of interest on a charge of
a type in (1) that exceeds or is capable of exceeding 0.8% of the
amount of the charge calculated per day from the date the charge is
payable until the date the charge is paid; or
(3) it provides for the payment by the borrower of one or more charges
(except for a charge to which (1) or (2) applies), on any amount of
credit provided which in breach of the agreement has not been repaid,
that alone or in combination exceed or are capable of exceeding 0.8%
of that amount calculated per day from the date of the breach until the
date that the amount has been repaid.
Cost caps: entering into agreements: Total cost cap
5A.2.2 R A firm must not enter into an agreement for high-cost short-term credit that
provides for the payment by the borrower of one or more charges that, alone
or in combination with any other charge under the agreement or a connected
agreement, exceed or are capable of exceeding the amount of credit
provided under the agreement.
Cost caps: entering into agreements: Initial cost cap
5A.2.3 R A firm must not enter into an agreement for high-cost short-term credit that
provides for the payment by the borrower of one or more charges that, alone
or in combination with any other charge under the agreement or a connected
agreement, exceed or are capable of exceeding 0.8% of the amount of credit
provided under the agreement calculated per day from the date on which the
borrower draws down the credit until the date on which repayment of the
credit is due under the agreement, but if the date of repayment is postponed
by an indulgence or waiver, the date to which it is postponed.
5A.2.4 R A reference to a charge in CONC 5A.2.3R (Initial cost cap) excludes a
charge to which CONC 5A.2.11R (Default cap) applies.
5A.2.5 G (1) The initial cost cap is calculated on a daily basis. However, a charge
or charges that may be provided for in an agreement in compliance
with this cap can amount to 0.8% of the credit provided (determined
in accordance with CONC 5A.2.6R to 5A.2.8G) multiplied by the
number of days from the date on which the borrower draws down the
credit until the date indicated in CONC 5A.2.3R.
(2) Where credit is drawn down in tranches or is repaid in instalments,
the calculation of the initial cost cap takes into account the different
amounts of credit outstanding and the different durations for which
the credit is provided.
Determining the amount of credit provided
5A.2.6 R The amount of credit provided under an agreement for high-cost short-term
credit for the purposes of CONC 5A.2.2R (Total cost cap) is the lesser of:
(1) the amount of credit that the lender actually advances under the
agreement; or
(2) the credit limit.
5A.2.7 R The amount of credit provided under an agreement for high-cost short-term
credit for the purposes of CONC 5A.2.3R (Initial cost cap) is the amount of
credit outstanding on the day in question under the agreement, disregarding
the effect of the borrower discharging all or part of the borrower’s
indebtedness in accordance with section 94(1) of the CCA (right to complete
payments ahead of time) by repayment of credit before the date provided for
in the agreement.
5A.2.8 G For these purposes, where a lender allows a borrower to make a number of
drawdowns of credit (which may be expressed to be possible up to a
specified credit limit) but only with the lender’s consent to each respective
drawdown, each drawdown is a separate agreement for high-cost short-term
credit and this chapter applies to each drawdown as a separate agreement
accordingly.
Refinancing
5A.2.9 R A firm must not enter into an agreement for high-cost short-term credit that
replaces an earlier agreement for high-cost short-term credit if the
replacement agreement provides for the payment by the borrower of one or
more charges that, taken together with the charges under the earlier
agreement or a connected agreement (which is connected to either the earlier
or the replacement agreement), exceed or are capable of exceeding the
higher of the amount of credit provided (determined in accordance with
CONC 5A.2.6R to 5A.2.8G) under the replacement agreement or the earlier
agreement.
5A.2.10 R A firm must not enter into an agreement for high-cost short-term credit that
replaces an earlier agreement for high-cost short-term credit if the
replacement agreement provides for the payment by the borrower of one or
more charges in connection with a breach of the agreement by the borrower
that, taken together with such charges provided for by the earlier agreement,
Default cap
5A.2.11 R A firm must not enter into an agreement for high-cost short-term credit if:
(1) it provides for one or more charges payable by the borrower in
connection with a breach of the agreement by the borrower, which
alone or in combination (and whether in relation to one breach or
cumulatively in relation to multiple breaches of the agreement) exceed
or are capable of exceeding £15; or
(2) it provides for the payment by the borrower of interest on a charge of
a type in (1) that exceeds or is capable of exceeding 0.8% of the
amount of the charge calculated per day from the date the charge is
payable until the date the charge is paid; or
(3) it provides for the payment by the borrower of one or more charges
(except for a charge to which (1) or (2) applies), on any amount of
credit provided which in breach of the agreement has not been repaid,
that alone or in combination exceed or are capable of exceeding 0.8%
of that amount calculated per day from the date of the breach until the
date that the amount has been repaid.
