Topic 22: Consumer Credit

Question 1

What is a Credit Intermediary?

Answer 1

Helps an individual to obtain credit or find the lender that is offering the best rates or that is willing to lend to those with a poor credit history.

Question 2

What is Annual Percentage Rate (APR)?

Answer 2

A measure of the total cost of borrowing that allows a fair comparison, between different lenders, of the total cost of borrowing. The Consumer Credit Act contains the formula for calculating the APR.

Question 3

What is Representative APR?

Answer 3

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

Question 4

What is Annual Percentage Rate of Charge (APRC)?

Answer 4

Similar to the APR, applying to first- and second-charge mortgage lending, personal loans, credit cards and hire purchase agreements. Introduced by the EU Mortgage Credit Directive from 21 March 2016.

Question 5

What is Consumer Credit Acts?

Answer 5

The main legislation governing the provision of consumer credit in the UK. The 1974 Act established the basic principles of consumer credit regulation, many of which are still in force today. The 2006 Act consolidated, expanded and brought up to date the earlier Act. The FCA enforces the Acts.

Question 6

What is Consumer Credit Sourcebook (CONC)?

Answer 6

The FCA rulebook containing provisions relating to the Consumer Credit Acts. CONC was introduced in April 2014.

Question 7

What is the Consumer Credit Directive?

Answer 7

The Consumer Credit Directive (CCD) was implemented by six sets of regulations (some of which have since been repealed as part of the changes in the regulation of consumer credit). The implementing regulations apply to all
consumer credit agreements regulated under the Consumer Credit Acts (CCAs),
other than agreements secured on land, although there are modifications for
certain types of agreement.