Consumer Credit Rules

Since 1 April 2014, the Office of fair trading (OFT) that regulated consumer became the Financial Conduct Authority (FAC). The regulation under this new office is more proactive, intrusive, and focused on the consumers’ good outcomes. The objectives of the FCA are to protect consumers and to provide a proportionate approach based on risk to the supervision of firms.

The FCA set up a strengthened scrutiny for all firms trying to enter the market. The regulator body wants to make sure that there is a proper, fit, and efficient management in all firms providing consumer credit products.

There are many requirements to such firms during and after the authorization process including the approved persons requirements, prudential standards for debt management firms, client assets requirements for debt management firms, requirements relating to controllers, periodic reporting, complaints reporting, and publication rules. The objective of these requirements is to take away untrusted firms and make sure those consumers who decide to settle their debts will deal only with a firm that will charge them fairly and help them.

The FCA requires to the firms to treat consumers fairly, to be fair, clear, and not misleading in financial promotion. The new rules about payday lenders are strict in order to provide better results for customers. Lenders must carry out more explicit affordability checks, provide information on free debt advice, and put a warning risk on adverts before to roll over a loan.

The city watchdog requires to firms of debt settlement to make clear disclosures to consumers before the process of the application. These disclosures include the amount a borrower can expect to save by settling a loan, legal issues during the loan settlement process, tax implications of settling a loan, the impact of the settlement on the consumer’s credit history. This information will enable consumers to assess their options about debt management.

All firms providing credit to consumers must follow the rules established under the Consumer Credit Act. According to this Act, a loan agreement should not include unfair conditions and terms, misleading or missing information, misleading or missing annual percentage rates. If a court law finds out with evidence that an agreement is unfair, the consumer will not have to pay back the loan.

You can ask an audit of your credit agreement as long as there is a period of 12 months left and the balance is over £1000. This audit will show if your credit agreement is unfair.