FCA Regulations
The Financial Conduct Authority
The FCA is the UK's financial services regulator, responsible for ensuring markets function well and consumers are protected. All firms offering consumer credit must be authorised by the FCA. Authorisation requires meeting standards for business conduct, financial soundness, and compliance with consumer protection rules.
Consumer Credit Act Requirements
The Consumer Credit Act 1974 (as amended) governs credit agreements up to £25,000. It provides cooling-off periods for certain agreements, sets requirements for clear documentation, and establishes rights for borrowers. Lenders must provide adequate explanations of credit agreements and assess affordability before lending.
Responsible Lending Obligations
FCA rules require lenders to conduct thorough affordability assessments before granting credit. This includes verifying income, assessing existing debts, and ensuring the borrower can sustainably meet repayments. Lenders must not lend where it would be clearly unaffordable or cause financial harm.
Your Rights as a Borrower
Under FCA regulations, you have the right to clear information before entering an agreement, a cooling-off period for certain agreements concluded away from business premises, protection from unfair contract terms, and access to the Financial Ombudsman Service if you have complaints. You can check any firm's FCA authorisation status on the FCA register.