CONC: Consumer Credit Sourcebook Requirements for UK Firms

What It Is

The Consumer Credit sourcebook (CONC) is the FCA's dedicated rulebook for firms engaged in consumer credit activities. It replaced the Office of Fair Trading's consumer credit regime when the FCA took over regulation of consumer credit on 1 April 2014 and has been substantially updated since, most recently to align with Consumer Duty.

CONC covers the full lifecycle of a consumer credit relationship. CONC 2 sets out conduct of business requirements. CONC 3 governs financial promotions and communications. CONC 4 deals with pre-contractual requirements. CONC 5 — the section that generates the most enforcement action — sets out the rules on creditworthiness and affordability assessments. CONC 6 covers post-contractual obligations including statements, notices, and account management. CONC 7 addresses arrears, default, and recovery. CONC 8 and 9 cover debt advice and debt management respectively.

The sourcebook applies to regulated credit agreements, consumer hire agreements, and the activities of credit brokers, debt advisers, debt collectors, and peer-to-peer lending platforms. It does not apply to first-charge mortgages (which fall under MCOB) or to credit agreements entirely outside FCA regulation.

CONC is not merely a technical rulebook. It is the primary enforcement tool the FCA uses in the consumer credit sector. The motor finance commission scandal, high-cost credit interventions, and persistent debt rules all stem from CONC provisions and the FCA's interpretation of what they demand.

Why the FCA Cares

Consumer credit touches more UK consumers than any other regulated financial product. The FCA regulates over 40,000 consumer credit firms, and the potential for widespread harm — unaffordable lending, aggressive collections, opaque charges — is significant. The FCA's own data consistently shows that consumer credit generates some of the highest complaint volumes and most serious detriment.

The regulator's focus on affordability intensified after the high-cost credit market review (2017-2019), which found systemic failures in how firms assessed whether customers could sustainably repay. The resulting interventions — price caps on payday loans, restrictions on rent-to-own pricing, and the persistent debt rules for credit cards — were all rooted in CONC requirements that firms had failed to meet.

More recently, the FCA's motor finance review revealed widespread failures in commission disclosure and affordability assessment. The Supreme Court's ruling on secret commissions has further raised the stakes. Firms that cannot demonstrate robust CONC compliance face not only regulatory action but also significant redress liabilities.

The FCA treats consumer credit affordability as a litmus test for Consumer Duty compliance. A firm that lends to customers who cannot afford to repay is, by definition, not delivering good outcomes.

Who It Affects

CONC applies to any firm with an FCA permission to carry on a consumer credit activity. This includes lenders (banks, building societies, specialist lenders, and fintech platforms), credit brokers (including motor dealers, retailers, and comparison websites), debt advisers (both commercial and not-for-profit), debt collectors, and firms that administer credit agreements.

The scope is broader than many firms appreciate. A retailer that offers interest-free credit is carrying on a credit broking activity and must comply with CONC. A technology platform that connects borrowers with lenders may be credit broking. A firm that buys debt portfolios and collects on them must comply with CONC 7 arrears and recovery provisions.

Credit brokers face particular obligations under CONC 4 (pre-contractual disclosure) and CONC 2 (remuneration and commission disclosure). The FCA has been clear that brokers who introduce customers to lenders offering unaffordable credit bear regulatory responsibility, especially where the broker's commission structure creates incentives to place volume over suitability.

What Firms Get Wrong

The most consequential failure is in affordability assessment. Firms routinely confuse credit scoring with affordability assessment. A credit score measures default probability using historical data; an affordability assessment evaluates whether this specific customer can sustainably meet repayments from their disposable income without undue difficulty. A customer with a perfect credit score can still find a loan unaffordable. The FCA has taken enforcement action against firms that relied exclusively on credit reference data without assessing income and expenditure.

The second persistent failure is proportionality — but in the wrong direction. Smaller firms often apply minimal affordability checks on the basis that their lending is low-value. The FCA has been explicit that the level of assessment must be proportionate to the risk, and that risk is not solely determined by the amount of credit. A small loan to a customer already in financial difficulty carries high risk regardless of its size. Repeat borrowing patterns, in particular, should trigger enhanced assessment.

Third, firms mishandle arrears. CONC 7 requires forbearance, but many firms treat it as an optional concession rather than a regulatory obligation. The FCA expects firms to make proactive contact, explore sustainable repayment options, suspend interest and charges where appropriate, and signpost free debt advice. Firms that immediately escalate to default notices and debt collection agencies without attempting forbearance are breaching CONC and almost certainly failing Consumer Duty.

Fourth, record-keeping is inadequate. Firms that conduct reasonable affordability assessments but fail to document what they considered and why they concluded that the lending was affordable are in a weak position if challenged. The FCA expects contemporaneous records that demonstrate the assessment, not retrospective rationalisation.

What Evidence the FCA Expects

The FCA expects firms to maintain documented affordability assessment frameworks that specify what information is gathered, how it is verified, and how the lending decision is reached. For each credit agreement, the firm should hold records showing the customer's income (and the basis for that figure), essential expenditure, existing credit commitments, and the resulting assessment of disposable income against proposed repayments.

For credit brokers, the FCA expects evidence that the firm assessed whether the credit product was appropriate for the customer and that commission arrangements did not create conflicts of interest. Since the motor finance commission review, disclosure records are under particular scrutiny.

Arrears management records must demonstrate that the firm attempted forbearance before escalating. The FCA will want to see contact logs, repayment plan offers, and evidence that the customer's circumstances were considered individually rather than processed through a standardised collections pathway.

Management information should track affordability assessment outcomes, decline rates, early arrears rates (particularly the proportion of accounts entering arrears within the first three months), and complaint volumes related to affordability. The FCA uses early arrears as a leading indicator of inadequate affordability assessment — a high early arrears rate suggests the firm is systematically lending to customers who cannot afford to repay.

Good Implementation

A firm with robust CONC compliance builds affordability assessment into its core lending process rather than treating it as a regulatory overlay. The assessment considers income, essential expenditure, existing commitments, and a reasonable buffer for contingencies. It uses multiple data sources — payslips or bank statements for income verification, credit reference data for existing commitments, and ONS or similar benchmarks to sense-check declared expenditure.

The firm calibrates assessment intensity to risk. Low-value, short-term credit to a customer with no adverse indicators may warrant a lighter-touch assessment. Higher-value, longer-term credit, or lending to a customer showing signs of financial stress, triggers enhanced checks. Repeat borrowing within a defined period automatically escalates the assessment level.

Arrears management is proactive. The firm monitors payment performance and contacts customers at the first sign of difficulty — not after multiple missed payments. Forbearance options are offered genuinely, not as a precursor to enforcement. Staff are trained to identify vulnerability indicators and adjust their approach accordingly. Free debt advice is signposted at every stage, not buried in standard correspondence.

The firm's MI framework tracks the right metrics: not just volume and revenue, but affordability decline rates, early arrears, customer outcomes post-forbearance, and complaint root causes. This data feeds into product design and policy decisions, creating a feedback loop that improves outcomes over time.

How Our Tool Helps

The MEMA FCA calculator provides a structured affordability assessment framework that aligns with CONC 5.2A requirements. It guides firms through a consistent assessment process — income verification, expenditure analysis, commitment mapping, and sustainability evaluation — producing documented outputs that meet FCA evidential expectations.

The tool incorporates configurable risk tiers, so firms can calibrate assessment intensity to the credit product and customer profile. It flags repeat borrowing patterns and adverse indicators that should trigger enhanced assessment, reducing the risk of systematic under-assessment that the FCA has identified as a sector-wide problem.

Assessment records are stored with full audit trails, giving firms ready access to the documentation the FCA will request during supervisory work or in response to complaints. The tool also generates MI reports tracking the metrics the FCA uses to evaluate consumer credit firms: decline rates, early arrears, forbearance outcomes, and affordability complaint trends.

How Our Service Helps

Our consumer credit compliance service provides end-to-end support for firms navigating CONC requirements. We conduct independent reviews of your affordability assessment framework, benchmarking your approach against FCA expectations and recent enforcement outcomes. Where we identify gaps, we deliver a practical remediation plan with prioritised actions.

For firms facing FCA supervisory engagement — whether a routine information request, a skilled person review under Section 166, or an enforcement investigation — we provide targeted preparation support. We understand how the FCA approaches consumer credit supervision and what evidence it will request. Our team includes practitioners with direct experience of FCA enforcement in the consumer credit sector.

We also provide outsourced compliance monitoring for consumer credit firms that need independent assurance but lack the resource for a dedicated compliance function. This includes file reviews, arrears handling audits, financial promotions sign-off, and regulatory change monitoring.

Relevant Sectors

Consumer credit firms span a wide range of business models, each facing distinct CONC challenges. Traditional lenders — banks and specialist finance houses — face the most complex affordability assessment obligations, particularly for longer-term and higher-value credit. The FCA's persistent debt rules for credit cards and its interventions in the overdraft market have added further requirements for these firms.

Credit brokers, including motor dealers and retail finance intermediaries, face scrutiny on commission disclosure and suitability. The motor finance commission review has made broker compliance a board-level issue for any firm involved in point-of-sale finance. Brokers that cannot demonstrate they assessed whether the credit was appropriate for the customer — not just whether the customer could be approved — are exposed.

High-cost credit firms, including those offering guarantor loans, home-collected credit, and catalogue credit, operate under the most intensive FCA supervision. Price caps, enhanced affordability requirements, and the FCA's ongoing work on relending patterns mean these firms face a regulatory burden disproportionate to their size.

Fintech lending platforms and buy-now-pay-later providers are an emerging area of focus. As BNPL moves towards full FCA regulation, firms in this space must prepare for CONC obligations that many have not previously faced. Early engagement with CONC requirements is essential for firms that wish to be regulated rather than regulated out.