Credit limits
Credit limits

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Credit limits
  • Definition of credit limit
  • Creditworthiness assessment CONC 5.2A
  • Credit limits in advertising
  • Credit limits in pre-contract information and agreements
  • Credit limits and post contract business practices
  • Overdraft credit limits
  • The Standards of Lending Practice
  • Exceeding the credit limit on a running account credit agreement
  • FCA’s review of credit card fees and charges
  • more

Definition of credit limit

A credit limit is used in running-account credit agreements and is the maximum amount the borrower can drawdown, disregarding any term of the agreement allowing that maximum to be exceeded on a temporary basis. A credit card would be an example of a running-account credit agreement. A running-account credit agreement in the context of the FCA’s Consumer Credit sourcebook is defined in the FCA Glossary as a facility under a credit agreement under which the borrower or another person is enabled to receive from time to time from the lender or a third party cash, goods or services to an amount or value, such that, taking into account payments made by or to the credit of the borrower, the credit limit (if any) is not at any time exceeded.

Most consumer-facing documentation required to be provided under the Consumer Credit Act 1974 (CCA 1974) must contain details of the credit limit.

Creditworthiness assessment CONC 5.2A

Before granting or significantly increasing the amount of credit available to the borrower, the creditor must comply with the requirements of CONC 5.2A.12 and make an assessment as to the borrower's creditworthiness. See Practice Note: Responsible lending requirements—CONC 5 for the FCA’s full position on creditworthiness requirements.

On 31 July 2017, FCA launched a consultation (CP17/27) on proposed changes to its