What the requirement means
Assessing financial circumstances in arrears means gathering enough reliable information to identify repayment difficulty and consider a sustainable response. It is not the same exercise as the original creditworthiness assessment, and the evidence needed depends on the consumer's circumstances, product and applicable legal duties. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
Assessing the individual case
Begin with verified repayment obligations, amounts overdue, remaining balance, existing concessions and customer explanations. A disputed charge or unallocated transfer should first be resolved as an account issue; do not treat a potentially incorrect balance as proof of lack of money. Audit a sample of actual customer cases rather than relying only on a policy. Compare the information available at the time with the option offered and inspect notices and account movements afterward. Pay particular attention to whether automated recovery action continued after a forbearance decision. Supervisory evidence should show consistent routing, clear explanations and a reasoned outcome, without treating consistency as a reason to ignore different personal circumstances. A short review memo can identify the responsible staff member, applicable rule, exception and follow-up date.
Available responses and boundaries
Ask about the likely duration of difficulty and the consumer's broad income and essential expenditure where relevant and proportionate. Avoid intrusive demands that do not contribute to a decision. Record whether the consumer has priority debts or essential costs that would make a proposed payment plan unsustainable. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
Cost and repayment consequences
For UK regulated firms, FCA CONC 7.3.4B places individual circumstances at the centre of appropriate forbearance. CONC 7.3.5 includes accepting reduced or token payments in appropriate circumstances and CONC 7.3.5G controls interest and charges where a repayment arrangement is being met. Audit a sample of actual customer cases rather than relying only on a policy. Compare the information available at the time with the option offered and inspect notices and account movements afterward. Pay particular attention to whether automated recovery action continued after a forbearance decision. Supervisory evidence should show consistent routing, clear explanations and a reasoned outcome, without treating consistency as a reason to ignore different personal circumstances. A short review memo can identify the responsible staff member, applicable rule, exception and follow-up date.
Reviewing an arrangement
When information is incomplete, identify whether the firm can give an interim response, request clarification or signpost free independent debt advice. A consumer unable to use a digital income form must have an appropriately managed route to explain the problem. Sensitive health or vulnerability information requires particular care. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
CCD2 and national implementation
The revised CCD2 Article 35 approach also emphasizes the consumer's individual circumstances before enforcement where reasonable forbearance is appropriate, but its national implementing measures generally apply from 20 November 2026. Do not state that the future directive presently imposes identical UK rules across EU Member States. Audit a sample of actual customer cases rather than relying only on a policy. Compare the information available at the time with the option offered and inspect notices and account movements afterward. Pay particular attention to whether automated recovery action continued after a forbearance decision. Supervisory evidence should show consistent routing, clear explanations and a reasoned outcome, without treating consistency as a reason to ignore different personal circumstances. A short review memo can identify the responsible staff member, applicable rule, exception and follow-up date.
Documentation and testing
Build a dated assessment record showing the data requested, why it was needed, what the consumer supplied, alternatives considered, expected payment affordability, the reasoning behind the outcome and when to review it. Test changes in circumstances, irregular income and a third-party debt adviser proposing an alternative. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
Frequently asked questions
Must the lender offer every type of forbearance?
No. The appropriate response depends on the circumstances and applicable rules.
When do revised CCD2 national provisions generally apply?
From 20 November 2026, subject to relevant national implementing measures and transitions.
Primary sources
FCA Handbook CONC 7.3 ↗Directive (EU) 2023/2225 ↗Read the source in its current version. National implementing measures and product-specific applicability may require additional research.