Responsible lending requirements—CONC 5
Produced in partnership with Jacqui Hatfield of Orrick, Herrington & Sutcliffe

The following Financial Services practice note produced in partnership with Jacqui Hatfield of Orrick, Herrington & Sutcliffe provides comprehensive and up to date legal information covering:

  • Responsible lending requirements—CONC 5
  • Creditworthiness assessment (CONC 5.2A)
  • When is a creditworthiness assessment required?
  • Is a creditworthiness assessment required for all credit agreements?
  • What is the scope and extent of the assessments?
  • Creditworthiness assessment to be reasonable
  • Conduct of business in relation to creditworthiness and affordability
  • Creditworthiness and sustainability
  • Can future income and expenditure be taken into account?
  • What is meant by ‘sustainable’?
  • More...

Responsible lending requirements—CONC 5

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

Firms carrying on a consumer credit-related activity must comply with the Financial Conduct Authority’s (FCA) Consumer Credit Sourcebook (CONC). CONC chapter 5 (CONC 5) applies to all firms with respect to consumer credit lending and contains rules and guidance on responsible lending requirements, including the requirement to conduct a creditworthiness assessment before entering into an agreement, conduct of business in relation to credit brokering and peer to peer (P2P) agreements and conduct of business in relation to affordability and creditworthiness.

The FCA launched a consultation paper (CP17/27) on July 31 2017, CP17/27: Assessing creditworthiness in consumer credit on proposed changes to its rules and guidance on assessing creditworthiness in consumer credit.

The FCA's consultation was prompted by concerns about the risk of potential harm to consumers from poor culture and practice by firms. The FCA was worried that this could lead to consumers being granted credit which they cannot afford

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