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Consumer Credit Act 2006

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Consumer Credit Act 2006 List of acts
 Selected UK Acts and Regulations
    Wills and probate
 
Crown Copyright Acknowledged
CONTENTS

Agreements regulated under the 1974 Act etc.

1. Definition of “individual”

2. Removal of financial limits etc.

3. Exemption relating to high net worth debtors and hirers

4. Exemption relating to businesses

5. Consequential amendments relating to ss. 1 to 4

Statements to be provided in relation to regulated credit agreements

6. Statements to be provided in relation to fixed-sum credit agreements

7. Further provision relating to statements

Default under regulated agreements

8. OFT to prepare information sheets on arrears and default

9. Notice of sums in arrears under fixed-sum credit agreements etc.

10. Notice of sums in arrears under running-account credit agreements

11. Failure to give notice of sums in arrears

12. Notice of default sums

13. Interest on default sums

14. Default notices

15. Enforceability of regulated agreements

16. Time orders

17. Interest payable on judgment debts etc.

18. Definition of “default sum”

Unfair relationships

19. Unfair relationships between creditors and debtors

20. Powers of court in relation to unfair relationships

21. Interpretation of ss. 140A and 140B of the 1974 Act

22. Further provision relating to unfair relationships

Businesses requiring a licence and consequences of not being licensed

23. Definitions of “consumer credit business” and “consumer hire business”

24. Debt administration etc.

25. Credit information services

26. Enforcement of agreements by unlicensed trader etc.

Applications for licences and fitness to hold a licence etc.

27. Charge on applicants for licences etc.

28. Applications for standard licences

29. Issue of standard licences

30. Guidance on fitness test

31. Variation of standard licences etc.

32. Winding-up of standard licensee’s business

33. Consequential amendments relating to ss. 27 to 32

Duration of licences and charges

34. Definite and indefinite licences

35. Charges for indefinite licences

36. Extension of period to pay charge for indefinite licence

37. Failure to pay charge for indefinite licence

Further powers of OFT to regulate conduct of licensees etc.

38. Power of OFT to impose requirements on licensees

39. Power of OFT to impose requirements on supervisory bodies

40. Supplementary provision relating to requirements

41. Procedure in relation to requirements

42. Guidance on requirements

43. Consequential amendments relating to requirements

Powers and duties in relation to information

44. Provision of information etc. by applicants

45. Duties to notify changes in information etc.

46. Power of OFT to require information generally

47. Power of OFT to require access to premises

48. Entry to premises under warrant

49. Failure to comply with information requirement

50. Officers of enforcement authorities other than OFT

51. Consequential amendments relating to information

Civil penalties

52. Power of OFT to impose civil penalties

53. Further provision relating to civil penalties

54. Statement of policy in relation to civil penalties

Appeals

55. The Consumer Credit Appeals Tribunal

56. Appeals to the Consumer Credit Appeals Tribunal

57. Appeals from the Consumer Credit Appeals Tribunal

58. Consequential amendments relating to appeals

Ombudsman scheme

59. Financial services ombudsman scheme to apply to consumer credit licensees

60. Funding of ombudsman scheme

61. Consequential amendments relating to ombudsman scheme

Miscellaneous

62. Monitoring of businesses by OFT

63. Disapplication of s.101 of the 1974 Act

64. Determinations etc. by OFT

65. Sums received by OFT

Final provisions

66. Financial provision

67. Interpretation

68. Consequential amendments

69. Transitional provision and savings

70. Repeals

71. Short title, commencement and extent

Schedule 1:Schedule A1 to the 1974 Act

Schedule 2:Part 3A of Schedule 17 to the 2000 Act

Schedule 3:Transitional Provision and Savings

Schedule 4:Repeals

 

An Act to amend the Consumer Credit Act 1974; to extend the ombudsman scheme under the Financial Services and Markets Act 2000 to cover licensees under the Consumer Credit Act 1974; and for connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Agreements regulated under the 1974 Act etc.

1 Definition of “individual”

In section 189(1) of the 1974 Act (definitions) for the definition of “individual” substitute—

“‘individual’ includes—

(a) a partnership consisting of two or three persons not all of whom are bodies corporate; and

(b) an unincorporated body of persons which does not consist entirely of bodies corporate and is not a partnership;”.

2 Removal of financial limits etc.

(1) In section 8 of the 1974 Act (which defines consumer credit agreements)—

(a) in subsection (1) for “personal” substitute “consumer”;

(b) subsection (2) shall cease to have effect.

(2) In section 15(1) of that Act (which defines consumer hire agreements) paragraph (c) and the “and” immediately preceding it shall cease to have effect.

(3) In section 43(3) of that Act (financial and other limits relating to regulation of advertisements) paragraph (a) and the “or” immediately after it shall cease to have effect.

3 Exemption relating to high net worth debtors and hirers

After section 16 of the 1974 Act insert—

“16A Exemption relating to high net worth debtors and hirers

(1) The Secretary of State may by order provide that this Act shall not regulate a consumer credit agreement or a consumer hire agreement where—

(a) the debtor or hirer is a natural person;

(b) the agreement includes a declaration made by him to the effect that he agrees to forgo the protection and remedies that would be available to him under this Act if the agreement were a regulated agreement;

(c) a statement of high net worth has been made in relation to him; and

(d) that statement is current in relation to the agreement and a copy of it was provided to the creditor or owner before the agreement was made.

(2) For the purposes of this section a statement of high net worth is a statement to the effect that, in the opinion of the person making it, the natural person in relation to whom it is made—

(a) received during the previous financial year income of a specified description totalling an amount of not less than the specified amount; or

(b) had throughout that year net assets of a specified description with a total value of not less than the specified value.

(3) Such a statement—

(a) may not be made by the person in relation to whom it is made;

(b) must be made by a person of a specified description; and

(c) is current in relation to an agreement if it was made during the period of one year ending with the day on which the agreement is made.

(4) An order under this section may make provision about—

(a) how amounts of income and values of net assets are to be determined for the purposes of subsection (2)(a) and (b);

(b) the form, content and signing of—

(i) statements of high net worth;

(ii) declarations for the purposes of subsection (1)(b).

(5) Where an agreement has two or more debtors or hirers, for the purposes of paragraph (c) of subsection (1) a separate statement of high net worth must have been made in relation to each of them; and paragraph (d) of that subsection shall have effect accordingly.

(6) In this section—

‘previous financial year’ means, in relation to a statement of high net worth, the financial year immediately preceding the financial year during which the statement is made;

‘specified’ means specified in an order under this section.

(7) In subsection (6) ‘financial year’ means a period of one year ending with 31st March.

(8) Nothing in this section affects the application of sections 140A to 140C.”

4 Exemption relating to businesses

Before section 17 of the 1974 Act insert—

“16B Exemption relating to businesses

(1) This Act does not regulate—

(a) a consumer credit agreement by which the creditor provides the debtor with credit exceeding £25,000, or

(b) a consumer hire agreement that requires the hirer to make payments exceeding £25,000,

if the agreement is entered into by the debtor or hirer wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.

(2) If an agreement includes a declaration made by the debtor or hirer to the effect that the agreement is entered into by him wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him, the agreement shall be presumed to have been entered into by him wholly or predominantly for such purposes.

(3) But that presumption does not apply if, when the agreement is entered into—

(a) the creditor or owner, or

(b) any person who has acted on his behalf in connection with the entering into of the agreement,

knows, or has reasonable cause to suspect, that the agreement is not entered into by the debtor or hirer wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.

(4) The Secretary of State may by order make provision about the form, content and signing of declarations for the purposes of subsection (2).

(5) Where an agreement has two or more creditors or owners, in subsection (3) references to the creditor or owner are references to any one or more of them.

(6) Nothing in this section affects the application of sections 140A to 140C.”

5 Consequential amendments relating to ss. 1 to 4

(1) In section 8(3) of the 1974 Act (which defines regulated consumer credit agreements) after “16” insert “, 16A or 16B”.

(2) In section 10 of that Act (running-account credit and fixed-sum credit)—

(a) in subsection (1) for “personal” wherever occurring substitute “consumer”;

(b) in subsection (3)—

(i) for “section 8(2)” substitute “paragraph (a) of section 16B(1)”;

(ii) for “subsection” substitute “paragraph”.

(3) In section 17(2) of that Act (small agreements) for “8(2)” substitute “16B(1)(a)”.

(4) In section 145(4) of that Act (types of hire businesses relevant to credit brokerage) after paragraph (a) insert—

“(aa) a business which comprises or relates to consumer hire agreements being, otherwise than by virtue of section 16(6), exempt agreements;”.

(5) In subsection (1) of section 158 of that Act (duty of credit reference agency to disclose filed information) for paragraph (a) substitute—

“(a) a request in writing to that effect from a consumer,”.

(6) After subsection (4) of that section insert—

“(4A) In this section ‘consumer’ means—

(a) a partnership consisting of two or three persons not all of whom are bodies corporate; or

(b) an unincorporated body of persons which does not consist entirely of bodies corporate and is not a partnership.”

(7) In section 181(1) and (2) of that Act (power to alter monetary limits etc.) for “8(2), 15(1)(c)” substitute “16B(1)”.

(8) In subsection (5) of section 185 of that Act (agreement with more than one debtor or hirer)—

(a) in paragraph (b) for “a body corporate” substitute “not an individual”;

(b) for “the body corporate or bodies corporate” substitute “each person within paragraph (b)”.

(9) In subsection (6) of that section after “a body corporate” insert “within paragraph (b) of that subsection”.

(10) In section 189(1) of that Act (definitions) in the definition of “exempt agreement” after “16” insert “, 16A or 16B”.

Statements to be provided in relation to regulated credit agreements
 
6 Statements to be provided in relation to fixed-sum credit agreements

After section 77 of the 1974 Act insert—

“77A Statements to be provided in relation to fixed-sum credit agreements

(1) The creditor under a regulated agreement for fixed-sum credit—

(a) shall, within the period of one year beginning with the day after the day on which the agreement is made, give the debtor a statement under this section; and

(b) after the giving of that statement, shall give the debtor further statements under this section at intervals of not more than one year.

(2) Regulations may make provision about the form and content of statements under this section.

(3) The debtor shall have no liability to pay any sum in connection with the preparation or the giving to him of a statement under this section.

(4) The creditor is not required to give the debtor any statement under this section once the following conditions are satisfied—

(a) that there is no sum payable under the agreement by the debtor; and

(b) that there is no sum which will or may become so payable.

(5) Subsection (6) applies if at a time before the conditions mentioned in subsection (4) are satisfied the creditor fails to give the debtor—

(a) a statement under this section within the period mentioned in subsection (1)(a); or

(b) such a statement within the period of one year beginning with the day after the day on which such a statement was last given to him.

(6) Where this subsection applies in relation to a failure to give a statement under this section to the debtor—

(a) the creditor shall not be entitled to enforce the agreement during the period of non-compliance;

(b) the debtor shall have no liability to pay any sum of interest to the extent calculated by reference to the period of non-compliance or to any part of it; and

(c) the debtor shall have no liability to pay any default sum which (apart from this paragraph)—

(i) would have become payable during the period of non-compliance; or

(ii) would have become payable after the end of that period in connection with a breach of the agreement which occurs during that period (whether or not the breach continues after the end of that period).

(7) In this section ‘the period of non-compliance’ means, in relation to a failure to give a statement under this section to the debtor, the period which—

(a) begins immediately after the end of the period mentioned in paragraph (a) or (as the case may be) paragraph (b) of subsection (5); and

(b) ends at the end of the day on which the statement is given to the debtor or on which the conditions mentioned in subsection (4) are satisfied, whichever is earlier.

(8) This section does not apply in relation to a non-commercial agreement or to a small agreement.”

7 Further provision relating to statements

(1) In section 78 of the 1974 Act (duty to give information to debtor under running-account credit agreement) after subsection (4) insert—

“(4A) Regulations may require a statement under subsection (4) to contain also information in the prescribed terms about the consequences of the debtor—

(a) failing to make payments as required by the agreement; or

(b) only making payments of a prescribed description in prescribed circumstances.”

(2) In subsection (7) of that section for “(4) and (5)” substitute “(4) to (5)”.

(3) In section 185 of that Act (agreement with more than one debtor or hirer) for subsection (2) substitute—

“(2) Notwithstanding subsection (1)(a), where credit is provided under an agreement to two or more debtors jointly, in performing his duties—

(a) in the case of fixed-sum credit, under section 77A, or

(b) in the case of running-account credit, under section 78(4),

the creditor need not give statements to any debtor who has signed and given to him a notice (a ‘dispensing notice’) authorising him not to comply in the debtor’s case with section 77A or (as the case may be) 78(4).

(2A) A dispensing notice given by a debtor is operative from when it is given to the creditor until it is revoked by a further notice given to the creditor by the debtor.

(2B) But subsection (2) does not apply if (apart from this subsection) dispensing notices would be operative in relation to all of the debtors to whom the credit is provided.

(2C) Any dispensing notices operative in relation to an agreement shall cease to have effect if any of the debtors dies.

(2D) A dispensing notice which is operative in relation to an agreement shall be operative also in relation to any subsequent agreement which, in relation to the earlier agreement, is a modifying agreement.”

Default under regulated agreements
 
8 OFT to prepare information sheets on arrears and default

At the beginning of Part 7 of the 1974 Act insert—

“Information sheets 

86A OFT to prepare information sheets on arrears and default

(1) The OFT shall prepare, and give general notice of, an arrears information sheet and a default information sheet.

(2) The arrears information sheet shall include information to help debtors and hirers who receive notices under section 86B or 86C.

(3) The default information sheet shall include information to help debtors and hirers who receive default notices.

(4) Regulations may make provision about the information to be included in an information sheet.

(5) An information sheet takes effect for the purposes of this Part at the end of the period of three months beginning with the day on which general notice of it is given.

(6) If the OFT revises an information sheet after general notice of it has been given, it shall give general notice of the information sheet as revised.

(7) A revised information sheet takes effect for the purposes of this Part at the end of the period of three months beginning with the day on which general notice of it is given.”

9 Notice of sums in arrears under fixed-sum credit agreements etc.

After section 86A of the 1974 Act (inserted by section 8 of this Act) insert—

 
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