If you are behind, or about to fall behind, on a regulated credit agreement, the FCA’s Consumer Credit sourcebook (CONC) sets out how an authorised lender, credit owner or debt collector must treat you. The rules in CONC 7.3 are FCA rules and so apply UK-wide to firms the FCA authorises; how debts are enforced through the courts differs between the UK nations, and the sourcebook itself refers to separate Scottish procedures. A loan from an unauthorised lender is outside this protection.
The core duty: forbearance and due consideration
CONC 7.3.4R says a firm must treat customers in or approaching arrears or in default with forbearance and due consideration, and CONC 7.3.4BR says it must take account of the customer’s individual circumstances that it is, or should be, aware of. Guidance (CONC 7.3.4AG) says a firm should treat a customer as approaching arrears when they indicate they are at risk of missing one or more repayments, so you do not have to wait until you have defaulted to ask for help.
What forbearance can look like
CONC 7.3.5G gives examples of the steps a firm might take, depending on the customer’s circumstances. They include suspending, reducing, waiving or cancelling further interest or charges where a customer shows evidence of financial difficulty; allowing arrears to be paid later; accepting no, reduced or token payments for a reasonable period from someone who could not otherwise meet priority debts or essential living expenses; agreeing a repayment arrangement over a reasonable period; and refinancing that does not adversely affect the customer’s finances. The examples are not exhaustive and are guidance rather than a menu you can demand from.
Where a firm sets up a repayment arrangement as forbearance and you are keeping to it, CONC 7.3.5GR requires it to reduce, waive or cancel further interest or charges to the extent needed so that the debt does not rise during the arrangement.
Repayment plans must be sustainable
Under CONC 7.3.5BR a firm must take all reasonable steps to make sure any repayment arrangement it agrees is sustainable. Guidance says an arrangement is unlikely to be sustainable if it stops you meeting priority debts and essential living expenses, including payments such as mortgage, rent, council tax, food and utility bills. Any income and expenditure assessment must be objective (CONC 7.3.5DR), and firms must take reasonable steps to check that forbearance remains appropriate over time (CONC 7.3.5IR).
Pressure a firm must not apply
CONC 7.3.9R says a firm must not operate a policy of refusing to negotiate with a customer developing a repayment plan. CONC 7.3.10R says it must not pressurise you to pay in one or very few payments or unreasonably large amounts where that would harm your finances, to pay within an unreasonably short time, or to raise money by selling property, borrowing or increasing existing borrowing. CONC 7.3.11R requires a firm to suspend active pursuit of recovery for a reasonable period when you or a debt counsellor tell it you are developing a repayment plan; guidance (CONC 7.3.12G) says that period should generally be thirty days where there is evidence of a genuine intention to develop a plan, with a further thirty days considered where progress is shown.
Free debt advice and limits on enforcement
CONC 7.3.7AG says that, where appropriate, a firm should tell customers in or approaching arrears that free, impartial money guidance and debt advice is available from not-for-profit bodies and may refer them, for example to MoneyHelper. On enforcement, CONC 7.3.14R prohibits disproportionate action and says a firm must not apply for an order for sale or submit a bankruptcy petition without first fully exploring more proportionate options. Under CONC 7.3.17R repossession of a home, goods or vehicle may only be a last resort, and CONC 7.3.18R bars threatening court action to pressurise you into paying more than you can reasonably afford. Guidance (CONC 7.3.16G) says a firm should not take enforcement steps if it knows you are subject to a bankruptcy order, debt relief order or individual voluntary arrangement, with Scottish equivalents named in the sourcebook.
FAQs
Does forbearance mean my debt is written off?
No. The examples in CONC 7.3.5G include pausing or waiving interest, deferring arrears and reduced payments, which are ways of managing the debt rather than cancelling it. Forbearance can also affect how the account is reported, and firms should explain that to you (CONC 7.3.13AG).
Are the rules mandatory or just guidance?
Both appear in CONC. Entries marked R are rules that firms must follow, while entries marked G are guidance on how the FCA expects rules to be applied. Some examples in this article come from guidance.
What if my lender is not FCA-authorised?
These rules apply to authorised firms. If a lender is not on the FCA register, you should treat that as a serious warning sign and seek free debt advice.
Bottom line
The FCA does not oblige a lender to forgive a debt, but it does require lenders in the UK to treat borrowers who are struggling with forbearance, to agree sustainable plans, to pause pursuit while a plan is developed and to avoid disproportionate enforcement. If you are falling behind, contact the lender early, say clearly that you are struggling, and get free debt advice. This article is general information, not financial or legal advice.