Consumer Credit Quiz

Comprehensive CEMAP quiz covering consumer credit regulations, FCA requirements, and lending practices. Test your knowledge of the Consumer Credit Act, CONC rules, APR calculations, and regulatory compliance for credit agreements.

CEMAP Topics Covered: Consumer Credit Act, FCA CONC rules, APR requirements, cooling-off periods, high-cost short-term credit caps, creditworthiness assessments, and debt collection practices.

This quiz is specifically designed for CEMAP students preparing for their exams and financial services professionals maintaining their regulatory knowledge.

Consumer Credit Quiz

1. What is the primary purpose of the Consumer Credit Act 2006?

A. To regulate all forms of mortgage lending in the UK
B. To control the Bank of England’s base interest rate policy
C. To ensure fair treatment of insurance policyholders
D. To increase protection for borrowers in consumer credit agreements

2. Which of the following is exempt from the provisions of the Consumer Credit Act?

A. Credit card agreements used for personal spending
B. Loans over £25,000 to small businesses for business purposes
C. Hire purchase agreements for personal vehicles
D. Personal loans under £25,000 from a bank

3. What is the standard cooling-off period granted to borrowers under the Consumer Credit Act?

A. 14 days
B. 7 days
C. 28 days
D. 1 calendar month

4. Which of the following must be included in advertisements for consumer credit products under the Consumer Credit Directive?

A. The borrower’s most recent credit score
B. The lender’s credit scoring criteria
C. A representative example with a 'representative' APR
D. Details of the lender’s internal underwriting policy

5. What is the FCA's cap on daily interest and fees for high-cost, short-term credit?

A. 1.0% per day
B. 0.8% per day
C. 0.5% per day
D. 0.1% per day

6. Which of the following activities requires full FCA authorisation under consumer credit regulations?

A. Credit broking as a main business activity
B. Providing informal loans to friends with interest charged
C. Selling goods on credit within a private club
D. Offering personal loans under £5000 without a contract

7. What must lenders do before significantly increasing a customer's credit limit under CONC rules?

A. Obtain written consent from the borrower's bank
B. Notify the customer at least 30 days before the change
C. Automatically raise interest rates
D. Assess the customer's creditworthiness

8. Which of the following statements must be included in communications about loans secured on a borrower's home?

A. "This loan is subject to PRA regulation"
B. "Credit history can impact approval"
C. "Your home may be at risk if you do not keep up repayments"
D. "Early repayment charges will apply"

9. What is the maximum total repayment amount allowed under FCA rules for high-cost, short-term credit?

A. 100% of the amount borrowed
B. 150% of the amount borrowed
C. 200% of the amount borrowed
D. 250% of the amount borrowed

10. Which CONC section specifically addresses requirements for debt management firms?

A. CONC 10
B. CONC 12
C. CONC 5
D. CONC 7

11. Which of the following activities would require full FCA authorisation under consumer credit regulations?

A. Operating as a credit broker for payday loans
B. Selling goods on credit in a retail store under 50k
C. Offering a store card with a £500 limit
D. Providing debt counselling as a community service

12. Under the Consumer Credit Directive, what must a creditor do before granting a significant increase in credit?

A. Reduce the APR for the borrower
B. Complete a full FVA approved factfind
C. Charge any additional processing fees
D. Assess the borrower’s creditworthiness

13. Which CONC section specifically addresses overdraft pricing rules?

A. CONC 7E
B. CONC 10
C. CONC 5C
D. CONC 8

14. What is the maximum default fee allowed under the FCA’s cap on high‑cost, short‑term credit?

A. £25
B. £15
C. £50
D. £5

15. Which of the following is exempt from the cooling‑off period under the Consumer Credit Act?

A. A £10,000 personal loan
B. A credit card agreement
C. A hire purchase agreement for a car
D. A £40 or under overdraft facility

16. What must a credit intermediary disclose under the Consumer Credit Directive?

A. Whether they work exclusively with one lender
B. The borrower’s latest credit score
C. Their annual rate stress test eligibility
D. Competitors’ APRs

17. Under CONC 7, what must a lender do if a customer exceeds their overdraft limit?

A. Charge an immediate penalty fee
B. Report the customer to a credit reference agency
C. Close the account automatically
D. Contact the customer in writing without delay

18. Which of the following is a requirement for rent-to-own agreements under CONC 5B?

A. APR disclosure is optional if under £1,000
B. Prices must not exceed the average of three local competitors
C. Total credit cannot exceed 100% of the product’s cost
D. No cooling‑off period applies

19. What is the primary purpose of the representative APR in credit advertisements?

A. To match the Bank of England base rate
B. To show the absolute lowest possible rate a lender could offer
C. To include any broker fees in cost
D. To reflect the rate offered to at least 51% of successful applicants

20. Which CONC section covers debt collection practices?

A. CONC 5
B. CONC 7
C. CONC 3
D. CONC 9

23. Which of the following triggers a financial promotion risk warning under CONC 3?

A. "Warning: Late repayment can cause serious money problems"
B. "Low‑interest rates available"
C. "No fees for early repayment"
D. "Approval guaranteed"

22. What is the FCA’s requirement for firms monitoring overdraft repeat use?

A. Charge higher fees to customers who exceed limits
B. Report repeat users to credit agencies within 30 days
C. Suspend customer accounts after three limit breaches
D. Identify patterns of repeat use and take steps to reduce them

23. Which activity falls under the limited permission regime for consumer credit?

A. Peer‑to‑peer lending platforms
B. Offering incidental credit
C. Credit broking as a main business
D. Debt adjusting as the firm’s principal activity

24. Under UK consumer credit law, what is the primary legal significance of an “unenforceable agreement”?

A. The lender cannot obtain a court order to compel repayment unless the agreement is first made compliant
B. The debt is automatically written off and removed from the borrower’s credit file
C. The borrower is entitled to a refund of all payments made under the agreement
D. The lender must transfer the debt to the FCA

25. When calculating the APR for a regulated credit agreement, which of the following must be included in the cost of credit?

A. Optional payment protection insurance premiums, if purchased after the agreement is signed
B. Fees for services unrelated to the granting of credit, such as after‑sales warranties
C. Compulsory charges known at the outset that the borrower must pay as a condition of the credit
D. Any voluntary overpayments made by the borrower during the term

Consumer Credit Quiz

Consumer Credit Quiz

1. What is the primary purpose of the Consumer Credit Act 2006?

2. Which of the following is exempt from the provisions of the Consumer Credit Act?

3. What is the standard cooling-off period granted to borrowers under the Consumer Credit Act?

4. Which of the following must be included in advertisements for consumer credit products under the Consumer Credit Directive?

5. What is the FCA's cap on daily interest and fees for high-cost, short-term credit?

6. Which of the following activities requires full FCA authorisation under consumer credit regulations?

7. What must lenders do before significantly increasing a customer's credit limit under CONC rules?

8. Which of the following statements must be included in communications about loans secured on a borrower's home?

9. What is the maximum total repayment amount allowed under FCA rules for high-cost, short-term credit?

10. Which CONC section specifically addresses requirements for debt management firms?

11. Which of the following activities would require full FCA authorisation under consumer credit regulations?

12. Under the Consumer Credit Directive, what must a creditor do before granting a significant increase in credit?

13. Which CONC section specifically addresses overdraft pricing rules?

14. What is the maximum default fee allowed under the FCA’s cap on high‑cost, short‑term credit?

15. Which of the following is exempt from the cooling‑off period under the Consumer Credit Act?

16. What must a credit intermediary disclose under the Consumer Credit Directive?

17. Under CONC 7, what must a lender do if a customer exceeds their overdraft limit?

18. Which of the following is a requirement for rent-to-own agreements under CONC 5B?

19. What is the primary purpose of the representative APR in credit advertisements?

20. Which CONC section covers debt collection practices?

23. Which of the following triggers a financial promotion risk warning under CONC 3?

22. What is the FCA’s requirement for firms monitoring overdraft repeat use?

23. Which activity falls under the limited permission regime for consumer credit?

24. Under UK consumer credit law, what is the primary legal significance of an “unenforceable agreement”?

25. When calculating the APR for a regulated credit agreement, which of the following must be included in the cost of credit?

17. Under CONC 7, what must a lender do if a customer exceeds their overdraft limit?

18. Which of the following is a requirement for rent-to-own agreements under CONC 5B?

23. Which of the following triggers a financial promotion risk warning under CONC 3?