Mental capacity

The FCA's rules and guidance on mental capacity surrounding the sale of consumer credit are set out in CONC 2.10 and draw on guidance which was initially published by the OFT in October 2011.

Mental capacity is about whether a person has the ability to understand, remember and consider information which is presented to them and make an informed decision.  It should not be confused with mental health: a person with a mental health condition may still have the capacity to make an informed decision.

This module explains how motor finance businesses must consider a customer's ability to make a borrowing decision, as well as their right to protection if they are vulnerable.  It explains the practical steps which firms can take when dealing with customers with mental capacity issues who apply for motor finance.

CONC sets out how the FCA expects firms to deal with customers appropriately when it is known or suspected that a customer has, or may have, some form of mental capacity limitation which constrains their ability to make an informed borrowing decision.

Firms should take reasonable steps to make sure that suitable business practices and procedures are in place to:

  • identify customers who might lack the mental capacity to make informed borrowing decisions; and
  • treat customers appropriately where it is known that they may lack mental capacity.