U2: T22 - CONSUMER CREDIT Flashcards
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.
Answer is 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.
Answer is C)
The lender must advise the applicant of the reason for rejecting their application and provide details of the credit reference agency used.
A charity that provides debt counselling services must have full permission from the FCA.
True or false?
False. Full permission is required for debt counselling services that are carried out on a commercial basis.
What is the maximum that a borrower can be required to repay to a high‐cost, short‐term lender in fees and charges?
One hundred per cent of the original amount borrowed.
Interest rates provided in an advertisement for consumer credit must include what?
A representative example that includes a representative APR.
Providers of consumer credit must check that the applicant can afford the repayments and must check the applicant’s status with a credit reference agency.
True or false?
True.
These provisions are included under CONC 5: Responsible lending.
Which previously unregulated area of consumer credit now falls under the provisions of CONC 7?
Debt collection and debt administration.
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 ask the credit reference agency to liaise with Gyorgy to correct any inaccuracies.
b) The lender must show Gyorgy the report and allow him to challenge inaccuracies.
c) The lender must notify Gyorgy of the reason and give him contact details for the credit reference agency.
d) The lender Is under no obligation to disclose anything to Gyorgy about the reason for the refusal
c) The lender must notify Gyorgy of the reason and give him contact details for the credit reference agency.
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) A suitability report for the product.
b) An explanation of alternative options.
c) An adequate explanation of the product.
d) A demands and needs statement.
c) An adequate explanation of the product.
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 £10,000 to help Millie refurbish her nail bar.
c) A second charge of £30,000 on Jack’s home.
d) A loan of £30,000 for Gary to buy a family car.
c) A second charge of £30,000 on Jack’s home.
