Consumer credit income – what to report

We charge consumer credit firms annual fees based on the data in the CCR002 or CCR007. Find out what you need to report.

In your annual consumer credit returns you will be asked for ‘Total annual income’ as defined in FEES 4, Annex 11BR for the purposes of FCA Fees reporting’. This is question 12 of the CCR002, or question 6 of the CCR007. We use this figure to calculate your regulatory fees & levies for the following year.

This page outlines what you need to report to ensure you are charged correctly. It covers common scenarios, but it is not comprehensive, and you should refer to the Handbook rules in FEES 4 Annex 11B before submitting your return.

Credit broking

You need to include the commissions, fees and other related income (such as administration charges and volume bonuses) relating to regulated credit broking.

For example, you sell an item for £1,200. The customer pays a deposit of £200 and chooses to pay the rest of the balance on credit. You receive £1,000 from the credit provider plus £50 commission for making the introduction. You should report £50.

No commission income

Where you receive no commission income, or where you pay a subsidy to the credit provider, you should report using the ‘proxy’ measure of income. This is calculated as:

(5% + Bank of England base rate) x (value of credit agreement)

For example, you sell an item for £1,200. The customer pays a deposit of £200, and the remainder is paid via interest-free credit. The credit agreement is for £1000. You pay a subsidy to the finance provider, so you only receive £900. The Bank of England base rate at your reporting date is 0.5%. You should report (£1,000 x 5.5%) = £55.

You should use the Bank of England base rate at your reporting date, so:

  • From 2/11/17: (5 + 0.5%) = 5.5%
  • Between 4/8/16 – 1/11/17: (5 + 0.25%) = 5.25%
  • Before 4/11/16: (5 + 0.5%) = 5.5%

For consumer hire broking, where you receive no commission or equivalent income, you should use the value of the goods hired as the basis for the proxy measure.

Lending

You need to include the interest, fees, and other related income, that relate to entering into, or exercising rights under, regulated credit agreements.

For example, you charge a customer £200 interest and £30 fees on a loan agreement in the period. You should report £230.

If you sell goods or services on an interest-free arrangement, and you charge no fees or equivalent, you should report using the ‘proxy’ measure of income. This is calculated as:

(5% + Bank of England base rate) x (amounts received under agreements)

For example, you allow a customer to pay in 24 monthly instalments for services you provide. You receive 12 payments of £100 in the period. The Bank of England base rate at your reporting date is 0.5%. You should report (£1,200 x 5.5%) = £66.

Interest-free lending in 12 or fewer monthly instalments is often exempt from regulation, so should not be included – see instalment credit agreements.

Consumer hire as owner

You should report any income that relates to or results from the consumer hire agreement, even if these costs are not specified within the hire contract (e.g. delivery and charges for damages).

For example, a firm hires out tractors and charges are broken down as follows:

  1. Hire of tractor – payable each month.
  2. Any losses/damage to the tractor sustained whilst on hire.
  3. Annual servicing of the tractor whilst on hire.
  4. Delivery and pick up of tractor.

All these payments are income generated by the regulated consumer hire agreement. The firm’s business might for example include servicing tractors which are not on hire – but this particular tractor is serviced during the contract period because it is on hire.

Firms must review the definition of a consumer hire agreement (PERG 2.7.19K) to ensure they are only reporting on payments received for regulated hire contracts.

Other credit-related regulated activities

Report your gross income in relation to the provision of the activities. You should refer to the definition of income in FEES 4 Annex 11B. Please contact the FCA fees team if you are not sure.

Submit a 12 month period

If you are required to submit a CCR002 twice a year, you should provide the actual 12-month figure in year-end return for item 12. In your first six-month return you can submit nil under item 12 (as this figure is not used). For all the other items on the CCR002, you should refer to the reporting period.

Where your reporting period covers more or less than 12 months, for instance because you are newly authorised or have changed your year end, the figure must be annualised to represent a 12 month period. You should multiply the actual figure up or down as appropriate, and submit the annualised figure.

What not to include

Do not include:

  • your entire turnover, or your income from sales of ordinary goods or services.
  • income where the activity is unregulated because the borrower or hirer is not a “consumer”. For instance, you should exclude  income where the borrower or hirer is a limited company or partnership of more than three partners.
  • income from broking regulated mortgage contracts, whether first or second charge. This should be reported in fee block A18.
  • income from broking residential buy-to-let mortgages.
  • general insurance commissions, which should be reported under fee block A19. But you should include any commission element that relates to setting up a regulated credit agreement.
  • exempt instalment agreements.
  • VAT.
  • pence.

If you have made a decision not to charge

Where you have made a business decision to waive or discount charges, you should report the ‘fair value’ of the amount you otherwise would have received.

You should only use the ‘proxy’ measure if your main business is to provide goods or services. If your main business is to carry out a credit-related regulated activity, you should use the ‘fair value’ method if you receive no income on a deal.

When you can report nil

Normally you should only report nil if you have not carried out any credit-related regulated activities during the period.

If you have carried out activities for which you received no income, you should report using either the ‘proxy’ or ‘fair value’ methods described above.

One exception is where a credit broker merely displays posters or provides leaflets about publicly available credit products, and has no way of knowing if a customer took out a credit agreement because of this. Although the proxy measure does apply in this instance, the calculation would not be possible. For any credit broking that occurred in this manner, you would record £0.

Not-for-profit debt advice bodies can record £0 as they are not charged any annual fees.

Further information

Please consult the Handbook rules in FEES 4 Annex 11B before submitting the return. If you are completing the CCR007, you can also read our FAQs. If you have a query, email [email protected] or contact us.