Pre-contractual explanation for regulated credit agreements

Customers must be provided with a pre-contractual explanation even if they state they do not need one (CONC4.2.9R) and lenders and brokers must not encourage or induce customers to waive their right to receive the required information (CONC4.2.10R), which must include explanations of:

• the existence and nature of any commission arrangements with lenders and how this may affect the amounts payable (see chapter on financial incentives here);
• any features of the agreement which may mean it is unsuitable for particular types of use;
• how much the customer will have to pay periodically and, where the amount can be determined, in total under the agreement;
• any features of the agreement which might have a significant adverse effect on the customer which the customer is unlikely to foresee e.g. conditions and timing of the transfer of legal title to the vehicle to the customer;
• the principal consequences for the customer of failing to make payments under the agreement at the required times including, for example, any legal proceedings leading to the default of the agreement or repossession of the vehicle;