PART 9A

Rules and Guidance
CHAPTER 1

Rule-making powers

General rule-making powers of the FCA and the PRA

FCA general rules: cost of credit and duration of credit agreements
137C
1
The power of the FCA to make general rules includes power to make rules prohibiting authorised persons from—
a
entering into a regulated credit agreement that provides for—
i
the payment by the borrower of charges of a specified description, or
ii
the payment by the borrower over the duration of the agreement of charges that, taken with the charges paid under one or more other agreements which are treated by the rules as being connected with it, exceed, or are capable of exceeding, a specified amount;
b
imposing charges of a specified description or exceeding a specified amount on a person who is the borrower under a regulated credit agreement;
c
entering into a regulated credit agreement that—
i
is capable of remaining in force after the end of a specified period,
ii
when taken with one or more other regulated credit agreements which are treated by the rules as being connected with it, would be capable of remaining in force after the end of a specified period, or
iii
is treated by the rules as being connected with a number of previous regulated credit agreements that exceeds a specified maximum;
d
exercising the rights of the lender under a regulated credit agreement (as a person for the time being entitled to exercise them) in a way that enables the agreement to remain in force after the end of a specified period or enables the imposition on the borrower of charges within paragraph (a)(i) or (ii).
1A
The FCA must make rules by virtue of subsection (1)(a)(ii) and (b) in relation to one or more specified descriptions of regulated credit agreement appearing to the FCA to involve the provision of high-cost short-term credit, with a view to securing an appropriate degree of protection for borrowers against excessive charges.
1B
Before the FCA publishes a draft of any rules to be made by virtue of subsection (1)(a)(ii) or (b), it must consult the Treasury.
2
“
Charges
” means charges payable, by way of interest or otherwise, in connection with the provision of credit under the regulated credit agreement, whether or not the agreement itself makes provision for them and whether or not the person to whom they are payable is a party to the regulated credit agreement or an authorised person.
3
“
The borrower
” includes—
a
any person providing a guarantee or indemnity under the regulated credit agreement, and
b
a person to whom the rights and duties of the borrower under the regulated credit agreement or a person falling within paragraph (a) have passed by assignment or operation of law.
4
In relation to an agreement entered into or obligation imposed in contravention of the rules, the rules may—
a
provide for the agreement or obligation to be unenforceable against any person or specified person;
b
provide for the recovery of any money or other property paid or transferred under the agreement or other obligation by any person or specified person;
c
provide for the payment of compensation for any loss sustained by any person or specified person as a result of paying or transferring any money or other property under the agreement or obligation.
5
The provision that may be made as a result of subsection (4) includes provision corresponding to that made by section 30 (enforceability of agreements resulting from unlawful communications).
6
A credit agreement is a contract of the kind mentioned in paragraph 23 of Schedule 2, other than one under which the obligation of the borrower to repay is secured on land: and a credit agreement is a “regulated credit agreement” if any of the following is a regulated activity—
a
entering into or administering the agreement;
b
exercising or being able to exercise the rights of the lender under the agreement.
7
In this section—
a
“
specified amount
” means an amount specified in or determined in accordance with the rules;
b
“
specified period
” means a period of a duration specified in or determined in accordance with the rules;
c
“
specified person
” means a person of a description specified in the rules;
d
subject to that, “
specified
” means specified in the rules.
Pt. 9A applied (1.7.2021) by Regulation (EU) No. 600/2014, Art. 49A(12) (as inserted by Financial Services Act 2021 (c. 22), s. 49(5), Sch. 10 para. 9; S.I. 2021/739, reg. 3(o))
S. 137C(1A)(1B) inserted (18.2.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 131(1), 148(2) (with s. 131(3))
Pt. 9A applied (31.12.2020) by The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 4, Sch. 3 (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 27(a) and S.I. 2020/1385, regs. 1(2), 54(2))
Pt. 9A applied (with modifications) (31.12.2020) by The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/335), regs. 1(1), 74 (as amended by S.I. 2020/1385, regs. 1(4), 52(7)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
Pt. 9A applied (with modifications) (31.12.2020) by The Transparency of Securities Financing Transactions and of Reuse (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/542), regs. 1, 35 (as amended by S.I. 2020/1385, regs. 1(4), 56(7)) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
Pt. 9A substituted for ss. 138-164 (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 24(1), 122(3) (with Sch. 20); S.I. 2013/113, art. 2(1)(c), Sch. Pt. 3; S.I. 2013/423, art. 3, Sch.