The FCA Handbook: reading CONC, MCOB, BCOBS and COBS

When something goes wrong with a loan, a mortgage or an investment, the argument usually comes down to a set of rules most people have never read: the FCA Handbook. It is the rulebook the Financial Conduct Authority publishes for the firms it supervises, and it is split into sourcebooks with short names: CONC for consumer credit, MCOB for mortgages, BCOBS for banking and COBS for investments and advice. The Financial Ombudsman Service, which settles complaints when a firm will not, follows the same rules when it decides whether a firm treated you fairly¹.

The Handbook is written for firms, not for consumers, and much of it is dense. But the parts that matter to a borrower or saver are few, and they answer practical questions: what a lender must check before it lends, what a mortgage firm must assume about interest rates, what your bank must publish about its service, and what an adviser must put in writing when recommending an investment. This page walks through each of those in turn, and finishes with where the rules stop and how to quote one in a complaint.

How the FCA Handbook and its sourcebooks fit together

The Handbook is organised by subject. Each sourcebook covers one area of financial services, and each is divided into chapters, then numbered rules and guidance. A reference like "CONC 5.2A" means the Consumer Credit sourcebook, chapter 5, section 2A. The same pattern runs through MCOB (Mortgages and Home Finance: Conduct of Business), BCOBS (Banking: Conduct of Business) and COBS (Conduct of Business Sourcebook, covering investments and pension advice).

Two markers matter when you read a rule. A rule marked "R" is binding: a firm that breaks it can face FCA action. Text marked "G" is guidance: it sets out how the FCA expects firms to behave, and the Financial Ombudsman Service takes it into account when deciding complaints, but a firm can in principle do something different if it can justify it. When you cite a rule in a complaint, the letter matters.

The Handbook does not stand alone. Some consumer protections still come directly from the Consumer Credit Act 1974, and the government has criticised that split, noting that conduct requirements for credit providers are "spread between the act and the Financial Conduct Authority (FCA) Handbook"⁷. Reform is under discussion: the government has set out proposals to repeal the act's information provisions, with the FCA instead being responsible for setting requirements in the FCA Handbook⁷. Until that happens, both sources apply to credit.

Sitting above all the sourcebooks is the Consumer Duty, which the FCA introduced through Principle 12 of its Handbook: a firm must act to deliver good outcomes for its customers, with expected standards set out in PRIN 2A⁸. The FCA's full requirements on consumer understanding are in PRIN 2A.5 and Chapter 8 of its Finalised Guidance FG22/5⁹. In practice this means that even where a detailed rule is silent, a firm can still be judged against the general duty to deliver good outcomes.

CONC: the checks a lender must make before lending to you

CONC is the Consumer Credit sourcebook, and it applies to firms authorised by the FCA from 1 April 2014 onwards, taking over much of the work the Office of Fair Trading used to do¹⁰. Its central requirement is the creditworthiness assessment. Before lending, increasing an amount of credit or rolling over a loan, a firm must assess whether the credit is affordable for you. The Ombudsman, which applies CONC when it decides complaints about unaffordable lending, puts it this way: CONC "is clear about the need to complete a 'creditworthiness assessment', considering the potential for the lending commitment to 'adversely impact the consumer's financial situation'"².

The depth of the check is not fixed. CONC 5.2.3G says the assessment should be dependent on, and proportionate to, a number of factors, including the amount and cost of the credit and your borrowing history². A small, short-term loan from a firm that already knows your repayment record needs less digging than a large loan to a new customer. That proportionality is not a loophole: a light check still has to be a real check.

The rule applies at each decision point, not just the first one. Payday lenders, for example, must check your creditworthiness before they give you a loan, before they roll one over, and before they increase the amount of credit¹¹. The same logic sits behind the rules on credit limit increases, covered below.

Before dealing with any lender, you can check it is authorised. The FSCS advises checking your provider is authorised by the FCA before you rely on any protection¹², and the FCA's own guidance for buy now pay later borrowing tells you how to use its register: search the firm by name, select "Borrowing money, including credit card lending and credit information", and check the firm is "Authorised" with permission to "Lend you money on an unsecured basis"¹³.

Income and spending: what a lender must look at, not just what you say

CONC 5.2A sets out what the income part of the assessment involves. Unless the firm can demonstrate it is obvious you can repay, or you intend to repay wholly using savings or assets, the firm must take reasonable steps to determine or reasonably estimate your current income, estimate foreseeable material income reductions, and may only count expected future income increases where it reasonably believes, on appropriate evidence, that they are likely¹⁴. In other words, a lender cannot build an affordability decision on a pay rise you hope for, but it must think about a fixed-term contract ending.

The spending side is just as important. The firm must form a view of your outgoings, not simply accept whatever you declare, because the whole point of the assessment is whether the new commitment is sustainable alongside what you already pay. The general duty behind this is simple: all lenders must check your creditworthiness and satisfy themselves that you can afford the repayments before lending you money¹⁵.

The Ombudsman's case studies show how this works in practice. In one published case, concerning a borrower called Kevin, the Ombudsman considered "whether the lender should have looked at Kevin's income and spending and taken into account the nature of his illness"³. The lesson for a consumer is that a lender's failure to engage with information it had, or should have sought, about your circumstances is exactly the kind of thing a complaint can be built on.

For mortgages, the equivalent rules are stricter still, and are covered in the MCOB 11 section below.

Guarantors and joint borrowers are assessed too

An affordability assessment is not only about the person whose name is on the agreement. Under MCOB 11, a mortgage firm must assess whether the customer "and any guarantor" will be able to pay the sums due before entering into, or agreeing to vary, a regulated mortgage contract, and must not enter into the transaction unless it can demonstrate it is affordable¹⁶. A guarantor's finances are part of the assessment, not an afterthought.

That matters because guarantor lending has been a recurring source of complaints: people agree to guarantee a loan for a family member or friend, sometimes without a clear picture of what they are signing up to. The rules require the lender to satisfy itself that the guarantor, too, can afford the payments if called on. If a complaint later reaches the Ombudsman, one of the questions will be whether the checks on the guarantor were real.

The same principle of assessing everyone responsible runs through joint borrowing. Where two people are jointly liable, the assessment has to cover the household's combined position, including, for mortgages, the basic essential expenditure and basic quality-of-living costs of the customer's household¹⁶. The site's guide to guarantor rights covers what a lender must tell and check on a guarantor in more detail.

Credit cards and overdrafts: assumed drawn to the full limit

For running-account credit, which includes credit cards, CONC 5.2A requires the firm to make a pessimistic assumption: the customer draws down the entire credit limit at the earliest opportunity and repays by equal instalments over a reasonable period. When a firm increases a credit limit, it must assume the entire available balance up to the increased limit is drawn down at the earliest opportunity and repaid by equal instalments over a reasonable period, and it must set the credit limit in the light of these assumptions¹⁴. CONC 5.2A.27R(2) states the increase assumption as a rule for significant credit limit increases¹⁷.

This is why a credit card limit is not just a convenience figure. The lender has to be satisfied you could handle the full limit, not just your current balance, and it is why the rules on unrequested limit increases matter to consumers.

The same assumption of full drawdown runs through how APRs are calculated. For running-account credit where the credit limit is not yet known when the agreement is made, the total amount of credit is assumed to be £1,200¹⁸, and the FCA's Handbook states the same assumption for APR purposes⁴. Where the maximum credit limit is less than £1,200, the credit limit is assumed to be that maximum¹⁸. For credit cards specifically, the FCA has described the calculation as assuming "the credit limit is drawn down in full on the first day of the agreement and repaid in 12 equal monthly instalments with no further transactions"¹⁹. That makes the APR a standard comparison figure rather than a forecast of what you will pay.

Overdrafts sit slightly apart. An unarranged overdraft is itself a regulated credit agreement, arising when a personal current account becomes overdrawn without an arranged overdraft, or when the firm makes funds available beyond the limit of an arranged overdraft²⁰. But the FCA has clarified that the creditworthiness and affordability provisions "do not apply to overrunning (i.e. unauthorised overdrafts)"²¹: a bank does not run a CONC affordability assessment before letting an account slip into the red. What it must do instead is monitor for harm. CONC 5D.2.3G(4) says that when determining whether there is a high cumulative charge for overdraft use which may be harmful, the firm should consider the total amount of the combined charges both in absolute terms and relative to the customer's financial circumstances, where known²². The pages on overdraft removal and reclaiming overdraft charges cover the practical side.

MCOB 11: mortgage affordability and a 1% rate rise stress test

MCOB 11 is the responsible lending chapter for mortgages, last updated on 26 June 2026¹⁶. Its core requirement is that a firm must assess whether the customer, and any guarantor, will be able to pay the sums due, and must not enter into the transaction unless it can demonstrate it is affordable¹⁶. The chapter requires firms to treat customers fairly and act in accordance with the Consumer Duty by assessing whether the customer will be able to repay the sums borrowed and interest¹⁶.

The income side is spelled out in detail. The firm must take full account of the income of the customer, net of income tax and national insurance, and as a minimum the customer's committed expenditure and the basic essential expenditure and basic quality-of-living costs of the customer's household¹⁶. Two things a firm must not do are equally explicit: it must not base its assessment of affordability on the equity in the property used as security, and must not take account of an expected increase in property prices¹⁶. Rising house prices cannot make an unaffordable mortgage affordable.

On income evidence, the rule is absolute: a firm must obtain evidence of the income declared by the customer and must not accept self-certification of income, and the source of evidence must be independent of the customer¹⁶. The self-certified mortgage of the pre-2008 era is banned outright.

Then there is the stress test. A mortgage lender must assume that interest rates will rise by a minimum of 1% over the first five years of the regulated mortgage contract, even if the basis used indicates rates are likely to fall or rise by less than 1%¹⁶. The firm must consider likely future interest rates over a minimum period of five years from the expected start of the term, unless the interest rate is fixed for five years or more, or for the duration of the contract if that is less than five years¹⁶. The FCA has summarised the position: unless a mortgage's rate is fixed for five years or more, lenders must take into account the impact of likely future interest rate increases on affordability²³.

The 1% floor in MCOB is the regulatory minimum, not the market reality. The Bank of England's Financial Policy Committee previously recommended that lenders assess whether borrowers could still afford their mortgages if rates were to rise by 3 percentage points²⁴, a recommendation the FPC later withdrew²³. In practice, lenders were stressing borrowers at interest rates of around 8.5% by mid-2023, compared with 7% in the first quarter of 2022²⁵. So the binding rule is 1%, but a typical lender's own bar has been set well above it.

MCOB 11 also sets governance requirements around the assessment. A firm must put in place, and operate in accordance with, a written policy approved by its governing body setting out the factors it will take into account in assessing a customer's ability to pay, and compliance with that policy must be reviewed at least once per calendar year¹⁶. Firms must also have robust systems and controls, including management information and key performance indicators, to monitor the effectiveness of their affordability assessments, including in preventing payment difficulties¹⁶. One further rule worth knowing: where a first charge mortgage is for debt consolidation and the customer is credit-impaired, the firm must take reasonable steps to ensure that on completion the debts are actually repaid, unless they are included as committed expenditure in the affordability assessment¹⁶.

Changing your mortgage: when a new affordability check applies

MCOB 11's assessment requirement bites not only when a mortgage is taken out but when it is varied: the firm must assess affordability before "entering into, or agreeing to vary" a regulated mortgage contract¹⁶. Not every change counts as material, though. MCOB 11 gives examples of changes that may not be treated as immaterial to affordability: an extension of the term into the customer's retirement, changing between repayment and interest-only, and the addition or removal of a customer¹⁶. A firm cannot wave through a change that pushes payments into someone's retirement years without checking whether they can afford it.

Some variations are carved out of the full assessment. MCOB 11.6.2R does not apply to a variation which reduces, including to zero, the capital repayments required under a repayment mortgage for a period of no longer than six months, provided it is not a bridging loan or second charge and has not previously been varied under this provision¹⁶. A short-term payment holiday of that kind does not trigger the full affordability assessment. A variation which reduces the term of the contract is also outside MCOB 11.6.2R, but the firm must still consider affordability in line with the Consumer Duty and its responsible lending policy¹⁶.

The Mortgage Charter, agreed between the principal mortgage lenders, the Chancellor and the FCA, adds a further layer for customers who are up to date with payments. Under the charter, customers who are up-to-date with payments can switch to a new mortgage deal with their lender at the end of their existing fixed-rate agreement without a new affordability check²⁶, a support measure described in the charter itself as allowing the switch "without another affordability check"²⁷. The charter's one-off options can also be taken by up-to-date customers without a new affordability check or affecting their credit score²⁷. But the charter draws its own line: affordability will need to be checked if borrowers wish to permanently convert to an interest-only mortgage, or where the mortgage term is proposed to be extended beyond the borrower's expected retirement date²⁷. The site's page on the Mortgage Charter covers the full set of measures.

If payment difficulties have already begun, different rules apply. A mortgage firm must have robust systems and controls in place, including management information and key performance indicators, to monitor the effectiveness of its affordability assessments, including in preventing payment difficulties¹⁵. Firms must also treat customers fairly and send regular statements so borrowers know their current arrears position¹⁵.

BCOBS: the service information your bank must publish

BCOBS is the Banking: Conduct of Business sourcebook, and it governs the day-to-day relationship between a bank or building society and a personal customer. Its opening rule is broad: a firm must provide a prompt, efficient and fair service to a banking customer²⁸. One specific duty sits behind the current account switching process: a firm must provide a prompt and efficient service to enable a banking customer to move to a retail banking service provided by another firm²⁸. Your old bank cannot drag its feet when you leave.

On statements, BCOBS 4.2.1R(1) requires a firm to provide or make available to a banking customer, on paper or in another durable medium, such regular statements of account as are appropriate to the type of retail banking service provided²⁹. There is an exemption where the firm has provided a pass book or other document in a durable medium that records the transactions²⁹. The firm must also provide a true copy of any statement, on paper or in another durable medium, within a reasonable period of time if you ask for one²⁹. Guidance adds that a firm should indicate the rate or rates of interest that apply to the service in each statement²⁹. The page on paper statements covers the practical questions around this.

The most visible part of BCOBS for consumers is the publication requirement in BCOBS 7. Firms must publish tables of information about their current accounts, in order, on one webpage, preceded by the statement "The Financial Conduct Authority requires us to publish the following information about our personal current accounts:"⁵. Among the tables is Table 8, which covers how quickly the firm replaces debit cards which have been lost, stolen or stopped⁵. So if you want to know how long your bank takes to replace a lost card, or how quickly it opens an account, the answer must be on its website in a standard format, last updated in this form on 6 April 2020⁵.

COBS: what a suitability report must tell you

COBS is the Conduct of Business Sourcebook covering investments and pension advice. When a firm recommends an investment or a pension transfer, it must give you a suitability report, and the suitability report rules set a floor on what that report must contain. It must, at least, specify the client's demands and needs, explain why the recommended transaction is suitable, and explain any possible disadvantages; where a life policy is involved, it must include a personalised recommendation explaining why a particular life policy would best meet the client's demands and needs⁶.

The report matters most when things go wrong, because it is the written record of what the adviser understood about you and why the recommendation followed from it. If the report does not match your actual circumstances, or disadvantages were left out, that gap is evidence in a complaint. Where a client declines to sign a one page summary confirming they intend to accept a recommendation to remain in their existing pension arrangement, the firm should follow the insistent client guidance in COBS 9.5A⁶: the firm can proceed with a transfer you insist on, but must handle it as an insistent client case.

The same suitability principle appears across the Handbook. ICOBS 5.3.1R requires a firm to take reasonable care to ensure the suitability of its advice for any customer entitled to rely on its judgement³⁰, and ICOBS 5.2.2BR requires that, when proposing a contract of insurance, the firm ensures it is consistent with the customer's insurance demands and needs³⁰. Where a firm advises on a package that may include several policies, it should ensure the suitability of its advice in relation to each policy on which it is advising³⁰.

For home purchase plans, a shared ownership and rent-to-buy product, the rules require that a customer is provided with an appropriate financial information statement in a durable medium before submitting an application³¹, and that the customer has had a reasonable opportunity to consider the financial information statement and the risks and features statement before being committed to an application³¹. The pattern across all these sourcebooks is the same: information first, then a decision the customer can actually make.

Where the rules stop

The Handbook's protections depend on the firm being regulated and the product being within scope, and both limits matter.

First, scope. CONC does not apply to most of the loans credit unions provide, and the standard of checks on those loans, for example the level of checks a lender may have needed to do before lending, will typically be lower than those imposed on lenders and loans covered by CONC². Licensed moneylenders are regulated by the FCA and must follow its codes of practice¹⁵, but the depth of protection varies with the regime. The page on what the FCA covers maps the boundary in detail.

Second, redress. The FCA does not have the power to grant redress to consumers who have suffered loss simply because a contract term or notice is unfair or insufficiently transparent³². Consumers may instead choose to complain to the firm and seek redress from it, and refer the complaint to the Financial Ombudsman Service if the firm does not satisfy the complaint and it is appropriate to do so³². The FCA can apply to court for restitution, or require restitution, where the use of an unfair term also amounts to a rule breach causing loss to consumers³², but that is a regulatory route, not an individual remedy. In short: the FCA polices the rules; the Ombudsman gets you your money back.

Third, some protections sit outside the Handbook entirely. FSCS protection depends on the firm being authorised, which is why checking the FCA register first matters¹². FSCS does not protect money a debtor pays under an individual voluntary arrangement arranged by insolvency practitioners, which are not regulated by the FCA, or debt advice¹⁵. The comparison page on FSCS or the Ombudsman explains which body handles which problem.

How to complain when a rule is broken

If you believe a firm broke a Handbook rule, the route is the same whatever the sourcebook:

1. Complain to the firm first, in writing, setting out what happened and what you want put right. Quote the rule by its reference, for example "CONC 5.2A" or "MCOB 11", and say what the firm did or failed to do.
2. Give the firm its chance to respond. It must acknowledge and investigate your complaint.
3. If the firm does not satisfy the complaint, refer it to the Financial Ombudsman Service, which follows the rules in the FCA Handbook when it decides whether the firm treated you fairly¹.
4. If the complaint concerns the conduct of a claims company, complain to the FCA directly. Poor conduct could include breaking the conduct rules for claims companies, unsolicited calls or texts, or the firm not being registered on the financial services register³³.

The Ombudsman's published material on unaffordable lending is a useful template for structuring a complaint about a loan: it frames the questions around whether the lender completed a creditworthiness assessment and whether the lending could adversely impact your financial situation². Its case studies, like the one considering whether a lender should have looked at a borrower's income and spending and taken into account the nature of his illness³, show the kind of detail that makes a complaint persuasive.

Free, impartial help is available at each stage. MoneyHelper information sheets are embedded in the mortgage arrears rules themselves³⁴, and the Ombudsman's service is free to consumers. The pages on complaining about the FCA, ombudsman or court and debt cover the routes in more detail.