Pre-contractual explanation for regulated credit agreements

Customers may not refuse to be given a pre-contractual explanation (CONC4.2.9R) and lenders and brokers must not encourage or induce customers to waive their right to receive the required information (CONC4.2.10R), which must include explanations of:

  • any features of the agreement which may mean it is unsuitable for particular types of use;
  • how much the customer will have to pay periodically and, where the amount can be determined, in total under the agreement;
  • any features of the agreement which might have a significant adverse effect on the customer which the customer is unlikely to foresee, for example, conditions and timing of the transfer of legal title to the vehicle to the customer;.
  • the principal consequences for the customer of failing to make payments under the agreement at the required times including, for example, any legal proceedings leading to the default of the agreement or repossession of the vehicle;
  • the effect of the right to withdraw from the agreement (and any other cancellation rights) and how and when these rights may be exercised (see below);  
  • the type of credit being sought;
  • the amount of credit to be provided and the associated cost and risk to the customer; and
  • the customer's understanding of the explanation provided (where it is possible to judge this).