Waivers and modifications: consumer credit

Find out how shared equity mortgage providers and other consumer credit firms can apply for a waiver or modification of specific requirements.

Firms with interim permission or applying for authorisation to offer consumer credit may be able to apply for a waiver or modification of specific requirements in the Consumer Credit (Agreements) Regulations 1983 (as amended), under section 60(3) of the Consumer Credit Act.

We can grant a waiver or modification if it is impracticable for a firm to carry out or comply with the specific requirements.

Waivers or modifications can only be issued if they do not prejudice the interests of the debtor or hirer.

Although this information can help you apply for a waiver, it is your responsibility to decide if it is required and seek legal advice if you are unsure.

Your firm must be authorised and hold the appropriate permissions for the regulated activities it carries out. If your firm does not hold the appropriate permissions, even if we grant a waiver it will automatically lapse.

Agreements eligible for consideration

Only certain agreements that are regulated by the Consumer Credit Act may be considered for a direction.

An application may be made under s.60(3) only if it relates to at least one of:

  • a consumer credit agreement secured on land
  • a consumer credit agreement under which a person takes an article in pawn
  • a consumer credit agreement under which the creditor provides the debtor with credit which exceeds £60,260
  • a consumer credit agreement entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by them
  • a consumer hire agreement

Note: if the consumer credit agreement is secured on land, but the lender is a housing authority, your firm may not need to apply for a waiver or modification. For more information see CONC App 1.3.1 or seek legal advice.

Applying for a waiver

When applying for a waiver, you must supply certain information. This includes:

  • information about your firm
  • a detailed description of the agreement to which a waiver or modification is sought
  • buyer’s illustration/explanatory information
  • a detailed explanation of why it would be impracticable for your firm to comply with the regulations in their current form

More information about what you need to provide is available on the application form:

Apply for a waiver

Supporting information

If you are applying for an exemption from providing key financial information, such as annual percentage rate (APR) or total amount payable, you should provide the borrower with illustrative information (buyer’s illustration) in the form of a pre-contract document.

If certain information is unknown or indeterminable, the illustrations should be based on reasonable and objectively reached assumptions. This should be clearly stated to the borrower.

The pre-contract information document should typically include:

  • an illustration of the calculation of interest rates if they are variable (making suitable assumptions with explanation)
  • example(s) showing how the total liability of the borrower will be calculated (making suitable assumptions with explanation)
  • an example of a personalised illustration tailored to the expected average borrower’s needs

See more on what to include in a pre-contract information document:

How we assess applications

We will not check for accuracy or compliance with the legislation. It is your responsibility to ensure agreements comply with the Consumer Credit Act and other relevant legislation, such as the Unfair Terms in Consumer Contracts Regulations 1999.

You should address possible non-compliance issues before you apply for a waiver or modification, or your application may be  delayed or rejected.

If we are satisfied that the application meets the criteria set out in the Consumer Credit Act we can issue a waiver or modification to the relevant agreements, subject to any conditions we might impose.

These conditions would be applied to protect consumers as intended in the Consumer Credit (Agreements) Regulations 1983 (as amended), but in a way that is not impossible for firms to adhere to.

It is important to supply as much information as possible when making your application. We will write to you if we require additional information, which can cause delays in processing your application.

A waiver or modification can be open-ended or time-limited depending on the circumstances and any conditions we have imposed.

A waiver or modification will be specific to the agreement which was submitted with the application. If any of the terms of the agreement have changed a new waiver or modification may be required.

If your firm’s business changes you should apply for a new waiver or modification, even if your firm is offering the same product.

If two firms are linked and offer the same product you will still need a direction for each authorised firm.

Advertising

If we grant a waiver or modification it will not cover your firm’s advertising. You must comply with all other applicable elements of the Consumer Credit (Agreements) Regulations 1983 (as amended) Act.

A waiver or modification is not a prerequisite to being able to advertise a particular product for which the direction is necessary. Advertisers must ensure that their advertisements are clear and not misleading.