TOPIC 22 - Consumer credit Flashcards
Gyorgy has had an application for credit declined due to an unsatisfactory credit reference agency report. Which of the following correctly describes the lender’s position?
a) The lender must notify Gyorgy of the reason and give him contact details for the credit reference agency.
b) The lender must show Gyorgy the report and allow him to challenge inaccuracies.
c) The lender Is under no obligation to disclose anything to Gyorgy about the reason for the refusal.
d) The lender must ask the credit reference agency to liaise with Gyorgy to correct any inaccuracies.
a) The lender must notify Gyorgy of the reason and give him contact details for the credit reference agency.
Which of the following is one of the restrictions the FCA has placed on high‑cost, short‑term credit?
a) Default fees cannot exceed £20.
b) Fees and charges can never exceed 75% of the amount borrowed.
c) Loans cannot be rolled over.
d) Interest and fees cannot exceed 0.8 of the loan per day.
d) Interest and fees cannot exceed 0.8 of the loan per day.
The 2006 Consumer Credit Act introduced an Unfair Relationships Test, which enables borrowers to challenge a credit agreement:
a) by reference to the Financial Ombudsman Service.
b) through the courts.
c) by referring the case to the FCA.
d) through a statutory tribunal.
b) through the courts.
For the purposes of the Consumer Credit Act, a small partnership has how many partners?
a) Two or fewer.
b) Three or fewer.
c) Four or fewer.
d) Five or fewer.
b) Three or fewer.
Joseph visited his local bank to discuss a car loan for £15,000 and signed the application form while talking to the adviser. What cooling-off period applies to the agreement?
a) He is not entitled to a cooling-off period.
b) 7 days.
c) 14 days.
d) 28 days.
a) He is not entitled to a cooling-off period.
A cooling-off period doesn’t apply because the agreement was signed on the lender’s premises.
When recommending a credit product to a customer, which of the following must the lender provide?
a) An explanation of alternative options.
b) A demands and needs statement.
c) An adequate explanation of the product.
d) A suitability report for the product.
c) An adequate explanation of the product.
The annual percentage rate of charge applies to which of the following?
a) Mortgages, personal loans and credit cards.
b) Mortgages and personal loans.
c) Mortgages only.
d) Credit cards and hire purchase agreements.
c) Mortgages only.
Which of the following unsecured loans would not be subject to the rules contained in the FCA Consumer Credit sourcebook?
a) Karen’s credit card with a £10,000 credit limit.
b) A loan of £30,000 for Gary to buy a family car.
c) A loan of £10,000 to help Millie refurbish her nail bar.
d) A second charge of £30,000 on Jack’s home.
d) A second charge of £30,000 on Jack’s home.
High-cost, short-term credit must include the message: “Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.”
a) True b) False
a) True
The EU Credit Directive requires that a representative APR must be shown in any advert that shows an interest rate. The representative APR must apply to at least what percentage of successful applicants for the credit product?
a) 26%.
b) 51%.
c) 76%.
d) 81%.
b) 51%.
Which of the following is exempt from the Consumer Credit Acts?
a) A credit card account with a limit of £5,000.
b) A further advance for house repairs of £15,000.
c) A loan for £20,000 secured on property for car purchase.
d) An unsecured personal loan of £10,000.
b) A further advance for house repairs of £15,000.
Regulated mortgages, including further advances for any purpose, are exempt from the CCAs.
Rather, these loans would be regulated under MCOB.
How does providing an APR in relation to consumer credit help consumers?
It allows consumers to compare products more accurately, as the APR
includes not only the interest rate but also any fees and charges that apply
to the product
Businesses are not protected by the provisions of the Consumer Credit Acts. True or false?
False. Partnerships with three partners or fewer and sole traders are
covered by the CCAs, as well as ‘natural persons’ and unincorporated
associations.
How long is the cooling off period for a customer once they have signed a consumer credit agreement?
Fourteen days from the conclusion of the agreement, or from the point the consumer receives the agreement if this is later.
If a lender rejects an application on the basis of information from a credit reference agency, what must the lender do?
a) Ensure the applicant is not made aware of the reason for the rejection to protect the confidential nature of the lender’s relationship with the credit reference agency.
b) Advise the applicant of the reason for rejecting their application.
c) Advise the applicant of the reason for rejecting their application and provide details of the credit reference agency used.
d) Advise the applicant of the reason for rejecting their application and provide details of a debt counselling service.
c) Advise the applicant of the reason for rejecting their application and provide details of the credit reference agency used.
