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Post-Contractual Requirements

[This section applies as a rule for consumer credit lender – however if you have any type of payment arrangement with a customer (e.g. debt collection, debt management, insurance, overdraft repayments etc,) you can still include this section as guidance and amend it to suit your business requirements]

The company confirms that we keep repayments records on all customer accounts where payment arrangements have been set up and we have system controls in place to identify signs of possible or actual financial difficult on the account.

Where financial difficulties are identified, our procedure is to contact the customer with immediate effect and place a hold ion the account should payments not be met. Our staff are then directed to follow the guidance and procedures in place for Financial Difficulties, Vulnerable Customers and Arrears, Default & Recovery Procedures.

Where the company has the right to increase an interest rate under a regulated credit agreement, we confirm that we never increase the rate without a valid and justifiable reason for doing so.

21.14.1 Post-Contract Policy

1. Policy Statement

The company are committed to ensuring that we understand and adhere to all regulatory and legal requirements regarding our post-contractual obligations. The well-being of our customers is a company priority and one that we take very seriously. We honour our commitment to treating customers fairly and responsibly through our structured policy and procedure programme and the relevant regulatory requirements.

We understand that we have a duty of care to comply with regulatory business practices on all post-contract accounts and we provide full disclosure and training to all staff members regarding their commitments and obligations when dealing with post-contract customers. This policy has been created in part to provide guidance and support for our staff, with the overall aim of providing a high quality and regulatory compliant product/service to each and every customer.

2. Purpose

The purpose of this policy is to provide clear guidance to our staff, to honour our duty of care responsibilities to customers and to meet our obligations regarding post-contract regulations and requirements. This policy sets out our objectives and details how we intend to be compliant with CONC 6.7 (and 6.8 if credit broker) of the FCA handbook.

The company provides staff training on the objectives and aims set out in this policy as well as the FCA requirements on post-contract requirements and any associated regulations, with the aim of ensuring that our staff understand their obligations and comply with any and all rules prior to, during and after any contractual agreement has been put into place.

We are committed to providing all customers with a high level of service whilst remaining compliant with the legal, statutory and regulatory requirements. This includes honouring our obligations under the post-contract disclosure section of the FCA handbook.

3. Scope

The policy relates to all staff (meaning permanent, fixed term, and temporary staff, any third-party representatives or sub-contractors, agency workers, volunteers, interns and agents engaged with the company in the UK or overseas) within the organisation and has been created to ensure that staff deal with the area that this policy relates to in accordance with legal, regulatory, contractual and business expectations and requirements.

4. What Are Post-Contract Requirements?

Post-contract requirements are a set of rules and regulations applicable under the Consumer Credit Act and detailed in CONC 6.7 (and 6.8 if credit broker) of the FCA handbook. They are the mandatory obligations of any lender, credit broker or firm who enters into a credit agreement or hire agreement with a consumer, of which the criteria must be satisfied until the credit agreement comes to an end.

Post-contract requirements are applicable as soon as any consumer credit agreement comes into effect, which includes refinancing and credit extensions.  Post-contract business practices have been designed to keep the needs and requirements of the customer at the forefront of a firms’ practices and to ensure that a customer’s account is monitored and maintained within the regulatory parameters of the FCA.

5. Objectives & Obligations

The company has laid out the below objectives and aims which we intend to meet in relation to post-contract business practices and with regards to all customers. For the purpose of this policy and for adhering to the regulatory requirements, a customer is defined to be experiencing financial difficulties if that customer: –

  • are two or more payments in arrears; or
  • has agreed a repayment plan with the firm in question; or
  • is in serious discussion with a firm which carries on debt counselling with a view to entering into a debt management plan and the firm has been notified of this fact.

[NOTE: Post-contract regulations differ based on business type – please add/delete the below objectives and sections as applicable to your specific firm.]

The company will ensure that: –

  • We will monitor each customer’s repayment record and take appropriate action where there are signs of actual or possible repayment difficulties. In such instances, we will refer to our Financial Difficulties Procedures, which ensure that we.
    • notify the customer of the risk of escalating debt, additional interest or charges and of potential financial difficulties
    • provide contact details for not-for-profit debt advice bodies
  • We will never amend the terms of a continuous payment authority (CPA) without first obtaining the customer’s consent, after having fully explained to the customer the reason for the amendment
  • Where we have a right to increase the interest rate under a regulated credit agreement, we will never do so unless there is a valid reason
  • Where we do increase a rate of interest based on a change in the risk presented by the customer, we will always ensure that: –
    • We notify the customer that the rate of interest has been increased based on a change in risk presented by the customer
    • if requested by the customer provide a suitable explanation which may be a generic explanation for such increases.
  • For the purposes of this policy and any associated procedures, the term ‘refinance’ means to extend, or purport to extend, the period over which one or more repayment is to be made by a customer whether by: –
    • agreeing with the customer to replace, vary or supplement an existing regulated credit agreement
    • exercising a contractual power contained in an existing regulated credit agreement; or
    • other means, for example, granting an indulgence or waiver to the customer.
  • With regards to refinancing, we will never encourage a customer to refinance a regulated credit agreement if the result would be the customer’s commitments are not sustainable.
  • We will never refinance a customer’s existing credit with the firm (other than by exercising forbearance), unless: –
    • we do so at the customer’s request or with the customer’s consent
    • we reasonably believe that it is not against the customer’s best interests to do so
  • With regards to refinancing high-cost short-term credit, we will always ensure that we: –
    • give or send an information sheet to the customer
    • (where reasonably practicable to do so), bring the sheet to the attention of the customer before the refinance
    • in the form of the arrear’s information sheet issued by the FCA referred to in section 86A of the CCA with the following modifications: –
    • for the title and first sentence of the information sheet substitute: –
      • “High-cost short-term loans
      • Failing to repay on time
        • Think carefully – rolling over or extending your loan may not be the best option and may make things worse.”; and
      • for the bullet points substitute:
        • Think carefully before borrowing more. Borrowing more money is likely to worsen your situation
        • Work out how much you owe. To do this, you will need to make a list of all the organisations you owe money to. A debt adviser can help you
        • Put priority debts first. Some debts are more urgent than others because the consequences of not paying them can be more serious than for other debts, for example, mortgage, rent, council tax/ rates, or gas or electricity arrears. A debt adviser can help you to budget to keep your finances under control
      • Discuss options with your lender
        • If you are having trouble paying back on time talk to your lender who can suggest ways to repay and make sure it is affordable for you.
        • If you don’t, you may quickly face increased costs from interest or charges. Missed payments could affect your credit rating and make it more difficult to get credit in future
      • Get free help and advice
        • People that access advice resolve their issues more quickly than those that don’t, and hundreds of thousands get free debt advice every year
        • Contact one of these organisations for free debt advice.
      • for the bullet point headed “Work out how much money you owe” substitute:
        • “Work out how much money you owe. To do this, you will need to make a list of all those you owe money to. A debt adviser can help you.”
      • for the title “Discuss options with your lender” substitute
        • “Discuss options with your peer to P2P platform”
      • for the bullet point which begins “If you are having trouble?” substitute
        • “If you are having trouble paying back on time talk to your P2P platform who can suggest ways to repay and make sure it is affordable for you.”

Store/Credit Card Requirements

  • We will always first allocate a repayment to the debt subject to the highest rate of interest (and then to the next highest rate of interest and so on) for: –
    • the outstanding balance on a credit card; or
    • the outstanding balance on a store card; or
    • a credit card or a store card, in relation to which there is a fixed-sum credit element, to repayments beyond those required to satisfy the fixed instalments
  • We will always set the minimum required repayment under a regulated credit agreement for a credit card or a store card at an amount equal to at least that amount which repays the interest, fees and charges that have been applied to the customer’s account, plus one percentage of the amount outstanding.
  • Where the above applies and we have applied interest to a period of more than one month, for the purpose of calculating the amount of the interest part of the minimum required repayment we may disregard any interest applied in respect of a period prior to the period of the statement in question.
  • Under a regulated credit agreement for a credit card or a store card, we will always provide a customer with the option to pay any amount they choose (equal to or more than the minimum required repayment but less than the full outstanding balance) on a regular basis, when making automated repayments.
  • We will never increase, nor offer to increase, the customer’s credit limit on a credit card or store card where: –
    • We have been advised that the customer does not wish to have any credit limit increases; or
    • a customer is at risk of financial difficulties
  • Under a regulated credit agreement for a credit card or a store card, we will always permit a customer at any time to: –
    • reduce or decline offers to increase the credit limit
    • decline to receive offers of credit limit increases
  • We will always notify the customer of a proposed increase in the credit limit under the agreement at least 30 days before the increase comes into effect, except where: –
    • the increase is at the express request of the customer
    • the increase is proposed by us, but the customer agrees to it at that time and wishes it to come into effect in less than 30 days.
  • Where a customer is at risk of financial difficulties, we will never increase the rate of interest under the agreement (other than where a promotional rate of interest ends) and will always notify a customer at least 30 days before an increase in the rate of interest under the agreement comes into effect.
  • Where we propose to exercise our power under a regulated credit agreement for a credit card or store card to increase the interest rate, we will always: –
    • permit the customer 60 days, from the date of our notice of the proposed increase during which period the customer may give notice to the firm requiring it to close the account
    • permit the customer to pay off the outstanding balance at the rate of interest before the proposed increase and over a reasonable period
    • give notice to the customer of the rights set out in the above 2 clauses

Credit Broker Requirements

  • Where the company take on the responsibility for giving to/receiving from a customer, in accordance with provisions of the CCA we will always ensure that we are familiar with the relevant statutory requirements and have adequate systems and procedures in place to comply with the provision in question
  • With regards to Refunds of Broker’s Fees, we will ensure that: –
    • Under section 155 of the CCA, an individual has a right to a refund of our fee where, following an introduction to a source of credit or of bailment (or in Scotland of hire), the individual has not entered into an agreement to which section 155 applies within six months of an introduction
    • In relation to a credit agreement the refund applies to any sum which is an amount that is or would enter into the total charge for credit paid or payable to or via the credit broker whether or not the firm describes it as a fee or commission
    • Where an individual withdraws from a regulated credit agreement under section 66A of the CCA or cancels a cancellable agreement under section 69 of the CCA, the agreement is treated as never have been entered into and hence the period referred to in section 155 continues to apply in these circumstances
  • We will always respond promptly to a request for a refund; this includes making payment of the refund promptly if a refund is payable
  • If a customer has not entered into an agreement referred to in section 155 of the CCA within six months of the customer being introduced by the firm to a potential source of credit, as soon as reasonably practicable after the expiry of that six-month period, we will ensure that, by any method, clearly bring to the customer’s attention: –
    • the right to request a refund under section 155 of the CCA
    • how to exercise the right to request the refund

6. Associated Documents

Some of the company’s post-contract requirements are related to other policies and procedures held in our compliance program. Therefore, objectives and regulations set out in this policy are to be followed in associated with one or more of the below documents: –

  • Continuous Payment Authority (CPA) Policy
  • Responsible Lending Policy
  • Treating Customers Fairly Policy
  • Vulnerable Customer Policy
  • Cancellation & Refund Policy

7. Responsibilities

The company will ensure that all staff are provided with the time, training and support to learn, understand and implement the Post-Contract Policy and any associated procedures. Management are responsible for a top down approach and in ensuring that all staff are included and have the support needed to meet the regulatory requirements in this area.