Topic 22 - Consumer Credit

Question 1

Consumer credit act 1974

Answer 1

To regulate, supervise and control certain types on lending to individuals and provide protection for certain lending practises. Applies to:

• Those providing credit
• Advice on obtaining credit
• Advice on repaying debts

Question 2

APR

Answer 2

The calculation on APR is under the terms of consumer credit act 1974, it’s takes into account 2 main factors:

• The interest rate
• Additional costs & fees charged when arranging the loan e.g. application fee

Question 3

Annual percentage rate of charge (APRC)

Answer 3

Introduced in March 2016, and applies to first and second charge mortgage lending

Question 4

Consumer credit act 2006

Answer 4

Introduced to offer better protection to consumers and create a more competitive credit market.

Question 5

Representative APR

Answer 5

An APR that applies to 51% or above of successful applicants for the credit product

Question 6

Credit intermediary

Answer 6

Helps an individual to get credit e.g. helps them complete a loan application

Question 7

Key elements of the Consumer credit sourcebook (CONC)

Answer 7

Is the framework for UK consumer credit regulation, key features include:

1. Application and purpose and guidance on financial difficulties
2. Conduct of business standards - general
3. Financial promotions and communications with customers
4. Pre-contractual requirements
5. Responsible lending

5a. Cost cap for high-cost short-term credit

6. Post contractual requirements
7. Arrears, defaults and recovery including repossessions
8. Debt advice
9. Prudential rules for debt managements firms
10. Cancellations

12-15. Appendix 1