Firms' responsibilities under CONC

The CONC rules require firms to undertake an assessment of customers' creditworthiness before entering into credit agreements with them.

Motor dealers must work with finance companies to make a reasonable assessment of whether customers can afford to sustain regular payments under a finance agreement. It is reasonable to expect a motor dealer to pass pertinent information on a customer's circumstances to a finance company when that information has not and will not be captured on a finance application.

When assessing affordability in respect of a customer who may have a mental capacity limitation, firms must consider:

  • if the customer does not have the capacity to make a decision at the time that it needs to be made, the risk of the customer inappropriately taking on an unsustainable credit commitment is increased;
  • if it is suspected that the customer is having difficulty understanding, dealers should mitigate these risks by applying a particularly high level of scrutiny to the customer's purchase decision;
  • product explanations – including the key feature and risks – should be provided in clear, jargon-free language in a way that makes it as easy as possible for the customer to understand;
  • the customer's right to make a decision must be balanced with their right to safety and protection when they are unable to make decisions to protect themselves.  Achieving this balance is not a simple task, but the risk to such customers can be significantly mitigated by introducing effective affordability assessments;
  • dealers are expected to undertake a robust affordability assessment of the customer to facilitate an informed and appropriate lending decision regarding future affordability and possible change of circumstances.

Any action or decision made to take account of a customer's mental capacity limitation should always have the customer's best interests at heart and be specific to their personal circumstances.