FCA Handbook - CONRED 5.7 Provisions relating to communications with consumers

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CONRED 5.7 Provisions relating to communications with consumers

Consumer understanding outcomes

CONRED 5.7.2R to CONRED 5.7.17R apply when a lender communicates with a consumer under this chapter.

A lender must support its consumers’ understanding so that its communications:

(1) meet the information needs of those consumers;
(2) are likely to be understood by the consumers intended to receive the communications;
(3) equip those consumers to make decisions that are effective, timely and properly informed; and
(4) are tailored, taking into account the characteristics and needs of the consumers intended to receive the communication, including:
1. (a) any characteristics of vulnerability;
2. (b) the complexity of the relevant motor finance agreements;
3. (c) the communication channel used; and
4. (d) the lender’s role.

A lender must communicate information to consumers in a way which is clear, fair and not misleading.

Where a lender is interacting directly with a consumer on a one-to-one basis, it must, where appropriate:

(1) tailor its communications to meet the information needs of that consumer, taking account of whether they have any characteristics of vulnerability; and
(2) ask the consumer whether they understand the information and whether they have any further questions.

A lender must monitor and adapt its communications to support understanding and good outcomes for consumers.

The FCA expects lenders to ensure that information with respect to customer vulnerability is kept up to date. This information is needed for lenders to be able adapt their communications to support understanding and good outcomes for consumers under CONRED 5.7.5R.

In considering methods of communicating with consumers, a lender must satisfy itself that the communication channel:

(1) enables the communication of relevant information, which is required by this consumer redress scheme or which consumers are likely to need, in a way that supports effective decision-making; and
(2) provides an appropriate opportunity for consumers to review the information and, where relevant, assess their options.

Communications: supplementary

Whenever a lender sends a communication under a provision of this chapter containing information as set out in a specified Annex, it must:

(1) enclose or attach any relevant documents and, where the communication is a letter, enable the consumer to respond free of charge by including pre-paid envelopes;
(2) where the communication is a redress determination, insert a link to, or include the URL of, the Financial Ombudsman Service in respect of such determination;
(3) complete the communication by following the instructions set out in the specified Annex; and
(4) comply with any instructions in the specified Annex.

A lender must allocate a unique reference number to each scheme case it deals with and state this reference number in each communication it sends to a consumer.

All communications to consumers required under this chapter which are letters must be printed on the letterhead of the lender.

Consumer factsheet

Where a lender sends a consumer a provisional redress decision, a redress determination or an invitation to opt-in to the scheme as its first communication under the scheme with that consumer, it must send with that communication a consumer factsheet as set out in CONRED 5 Annex 11.1R in a durable medium.

Communication channels

A lender must ensure that that the durable medium used to communicate with a consumer does not:

(1) increase the risk of financial crime as compared to communicating by letter; or
(2) make it more difficult for that consumer to access the scheme than had the consumer been communicated with by letter.

Incorrect contact details

(1) Where a lender holds contact details for a consumer and becomes aware that the details are out of date, it must:
1. (a) take all reasonable steps to obtain up-to-date contact details for the consumer, including by contacting an appropriate third party such as a credit reference agency;
2. (b) where appropriate, resend any communication; and
3. (c) repeat any other steps to contact the consumer required by this chapter.
(2) If, having complied with (1), a lender is unable to contact a consumer, it need not take any further action pursuant to this chapter in relation to that consumer unless (3) applies.
(3) If, in relying on (2), the lender has ceased taking action but subsequently becomes aware of up-to-date contact details for that consumer, the lender must resend any communications and repeat the steps to contact the consumer required by this chapter.
(4) The means by which the lender may become aware of up-to-date contact details under (3) include receiving an opt-in communication or a complaint from the consumer:
1. (a) within 17 months of scheme effective date; or
2. (b) more than 17 months after the scheme effective date where the exceptional circumstances referred to in CONRED 5.4.41G apply.
(5) If a lender is resending a communication and repeating steps pursuant to (3), each applicable deadline for those steps is extended according to the length of the delay incurred by the application of (2).

(1) This rule applies where, under this chapter, a lender contacts a consumer who has not previously complained to the lender about a motor finance agreement.
(2) Where a lender contacts a consumer a second time because that consumer did not respond to the lender’s first communication, the lender must attempt to do so using an alternative communication channel.
(3) Where the lender does not have the contact details for a consumer using an alternative communication channel under (2), it must take all reasonable steps to obtain such contact details, including by contacting an appropriate third party such as a credit reference agency.
(4) Where a lender is not able to obtain alternative contact details after taking all reasonable steps as referred to in (3), it may send the communication by the same communication channel as before.

Taking reasonable steps to ascertain missing information

The reasonable steps referred to in CONRED 5.7.13R(1)(a) or CONRED 5.7.14R(3) must include, where applicable:

(1) checking public sources of information (for example, electoral rolls) but without incurring disproportionate cost;
(2) attempting to contact the consumer by telephone (at a reasonable hour when the consumer is likely to be available to receive the call) and by email; and
(3) attempting to contact any other party by telephone (during business hours) and by email.

When taking reasonable steps to ascertain missing information and when contacting a consumer, a lender must:

(1) not request more information than is sufficient for it to determine all of the outstanding matters;
(2) exercise sensitivity when requesting information about a consumer’s personal circumstances;
(3) ensure the consumer understands what information they have been asked to provide and in what format;
(4) only ask for information that is likely to be readily accessible to the consumer (and obtain the consumer’s authority to approach third parties for information on their behalf);
(5) allow the consumer at least 1 month to respond; and
(6) make clear why the lender is asking for the information and the consequence if the information is not provided.

Prohibition against influencing consumers against their interests

A lender must not make any communication to a consumer which has the object or effect of influencing, for the benefit of the lender, the outcome of the processes undertaken pursuant to this chapter, either by influencing the content of information provided by the consumer in response to the lender’s requests made under this chapter or otherwise.

Deceased customers

Where a lender is required to contact a consumer under a provision of these rules and where the lender knows that consumer to be deceased or becomes aware that they are deceased, it must take all reasonable steps to instead communicate with:

(1) a personal representative of the consumer’s estate; or
(2) the beneficiaries of the consumer’s estate.

The provisions of CONRED 5.7.13R and CONRED 5.7.14R also apply in respect of a lender’s communications with persons referred to in CONRED 5.7.18R.