Blackstone's Guide to the Consumer Credit Act

This new Guide to the Consumer Credit Act 2006 covers all of the new provisions, together with discussion of the growing importance of the internet and electronic technology to this area of the law, whilst also placing the new Act in the context of what has gone before. The commentary in the Guide is structured in a clear and logical way, thus enabling readers to quickly access the information they require.

Richard Mawrey QC is an advocate and legal scholar of 40 years experience who has been in practice at Henderson Chambers since 1965. He was involved in a very wide range of consumer credit law since before the 1974 Consumer Credit Act was passed, and helped to campaign for the full implementation of the Act in the early 1980s. He has edited Bullen Leake and Jacob's Precedents of Pleadings and Butterworths' Consumer Credit Legislation; and currently edits the Business Law section of Butterworths' Civil Court Precedents. Toby Riley-Smith (called 1995) is based at Henderson Chambers and specialises in the inter-related fields of commercial and consumer law and product liability fields. He advises consumers and finance houses on non-contentious and contentious aspects of the 1974 Act, and is a contributing editor to both Goode's Consumer Credit Law and Practice, one of the most authoritative texts on the subject, and Halsbury's Laws - Practice and Procedure.

TABLE OF CASES

xiii

TABLE OF STATUTES

xiv

TABLE OF STATUTORY INSTRUMENTS

xxii

TABLE OF ABBREVIATIONS

xxix

1. INTRODUCTION

1

(8)

A. The Consumer Credit Act 1974 and its History

B. The Move Towards Change

C. The Consumer Credit Act 2006

2. SCOPE OF THE ACT

9

(12)

A. General Scope of the Act

1. Scope

2. Commencement

B. Definition of 'Individual'

C. Removal of Financial Limits and New Exemptions from Regulation

1. Removal of Financial Limits

2. Exemption Relating to High Net Worth Debtors and Hirers

3. Exemption Relating to Business

D. Changes to the Terminology of the Consumer Credit Act 1974

E. Reform of the Licensing System

F. Civil Penalties and Reform of the Appeals Procedures

G. Creation of the Ombudsman Scheme

H. Statements

I. New Provisions for Default and Termination

J. Unfair Relationships

K. Miscellaneous Changes

L. Changes in Consumer Credit Regulations

3. LICENSING OF CREDIT BUSINESSES

21

(16)

A. The Existing System of Licensing under the Consumer Credit Act 1974

B. Scope of Business Covered by the Consumer Credit Act 2006

1. Redefinition of Terms: 'Credit Business' and 'Hire Business'

2. Ancillary Credit Business

3. Nine Categories of Business

C. Consequences of Trading without a Licence

D. Applying for a Licence: the 'Fitness Test'

1. Standard Licences

2. Consumer Credit EEA Firms

3. The Fitness test

E. Variation of Licences

1. Variation by Request

2. Compulsory Variation

F. 'Indefinite' Licences

G. Powers of the Office of Fair Trading

1. Imposing Requirements

2. Winding up Businesses

3. Provision of Information

H. Information

I. Penalties

J. The Consumer Credit Appeals Tribunal

1. Establishment of the Consumer Credit Appeals Tribunal

2. Appeals from the Consumer Credit Appeals Tribunal

4. FINANCIAL OMBUDSMAN

37

(10)

A. Introduction

B. The Financial Ombudsman Service

C. The New Consumer Credit Jurisdiction and Rules

1. Eligible Complainant

2. Type of Activity

3. Type of Respondent

4. Type of Business

5. Not Dealt with Elsewhere

D. Practice and Procedure of a Complaint to the Financial Ombudsman Service

1. The Initial Complaint to the Licensee

2. Complaint to the Financial Ombudsman Service

3. Informal Mediation/Conciliation

4. Investigation

5. Determination

6. Awards

7. Costs

8. Appeal

9. Enforcement

E. Funding of the Ombudsman Scheme

F. Various Consequential Amendments Relating to the Ombudsman Scheme

G. The Implications of the Consumer Credit Scheme

5. STATEMENTS

47

(10)

A. Introduction

B. Pre-contractual Information

C. Post-contractual Information

1. Fixed-sum Credit Agreements

(a) The Old Scheme under Section 77: Information on Request

(b) The New Provisions Introduced by the Consumer Credit Act 2006. Annual Statements

2. Running-account Credit Agreements

(a) The Current Scheme under Section 78

(b) Information on Request: Section 78(1)-(3)

(c) Statements Provided Automatically

(d) The New Provisions Introduced by the Consumer Credit Act

D. Conclusions

6. AGREEMENTS

57

(10)

A. Introduction

B. The Structure of Regulation

C. Amended Form and Content of Consumer Credit Agreements

1. Definition of Consumer Credit Agreement

2. Amended Regulation 2(1) and Schedule 1 to the Agreements Regulations: Revised Form and Content

3. Amended Regulation 2(4): the Order of the Prescribed Contents

4. Amended Regulation 2(7): Addition Form of Consent for Insurance Products

5. Amended Regulation 2(8) and 2(9): Contracts of Shortfall Insurance now Subsidiary Agreements

6. Amended Regulation 5: Statutory Forms

7. Amended Regulation 6: Signing of the Agreement

8. Amended Schedule 7 - Provisions Relating to Disclosure of the APR

D. Amended Form and Content of Consumer Hire Agreements

1. Definition of Consumer Hire Agreement

2. Amended Regulation 3(1) and Schedule 3 to the Agreements Regulations: Revised Form and Content

3. Amended Regulation 3(4): the Order of the Prescribed Contents

4. Amended Regulation 5: Statutory Forms

5. Amended Regulation 6: Signing of the Agreement

E. Amended Form and Content of Modifying Agreements

1. Definition of Modifying Agreement

2. Amended Regulation 7(1) and Schedule 8 to the Agreements Regulations: Revised Form and Content

3. Amended Regulations 7(4) and 7(11): the Order of the Prescribed Contents

4. Amended Regulation 6: Signing of the Agreement

7. DEFAULT AND ENFORCEMENT

67

(14)

A. The Existing Default and Enforcement Provisions

1. Default and Termination

2. Enforcement

3. Time Orders

B. Default Notices

C. 'Default Sums'

D. Notice of Default Sums

E. Interest on Default Sums

F. Notice of Sums in Arrears: Fixed-sum Credit Agreements

G. Notice of Sums in Arrears: Running-account Credit Agreements

H. Failure to Give Notice of Sums in Arrears

I. Information Sheets

J. Enforceability of Regulated Agreements

K. Time Orders

L. Interest Payable on Judgment Debts

8. EARLY SETTLEMENT

81

(8)

A. Former Rules on Early Settlement

B. Entitlement to Rebate

C. Items Included in Calculation

D. Changes to the Basis of Calculation

E. Settlement Date and Deferral

F. Savings

9. UNFAIR RELATIONSHIPS

89

(8)

A. Introduction

B. The Current Scheme of Extortionate Credit Bargains

1. Before the Consumer Credit Act 1974

2. The Consumer Credit Act 1974

C. The New Scheme of Unfair Relationships

1. The Repeal of Sections 137 to 140

2. New Section 140A: Unfair Relations between Creditors and Debtors

3. Section 140B: Powers of Court in Relation to Unfair Relationships

4. Section 140C: Interpretation of Sections 140A and 140B

5. Section 140D: Advice and Information Published by the Office of Fair Trading

10. ADVERTISEMENTS

97

(14)

A. The Previous Rules and the Need for Change

B. The 2004 Regulations-Scope and General

C. Content of Advertisements-Credit Agreements

D. Content of Advertisements-Hire Agreements

E. Calendar or Seasonal Periods

F. Security

G. The APR

1. What Govern the Stated APR?

2. When must the APR be Stated?

3. A Range of APRs

4. Obligatory Wording

5. Special Cases

H. What Not to Say

11. ELECTRONIC COMMUNICATIONS

111

(8)

A. Scope of this Chapter

B. Electronic Signatures

C. Distance Marketing

D. Changes to the Consumer Credit Act 1974

E. Changes to the Regulations

APPENDIX 1. Consumer Credit Act 2006

119

(60)

APPENDIX 2. The Consumer Credit (Advertisements) Regulations 2004

179

(14)

APPENDIX 3. The Consumer Credit (Agreements) (Amendment) Regulations 2004

193

(30)

APPENDIX 4. The Consumer Credit (Disclosure of Information) Regulations 2004

223

(4)

APPENDIX 5. The Consumer Credit (Early Settlement) Regulations 2004

227

(8)

APPENDIX 6. The Consumer Credit Act 1974 (Electronic Communications) Order 2004

235

(8)

APPENDIX 7. The Consumer Credit (Enforcement, Default and Termination Notices) (Amendment) Regulations 2004

243

(2)

APPENDIX 8. The Financial Services (Distance Marketing) Regulations 2004

245

(24)

APPENDIX 9. The Consumer Credit Act 2006—DTI's Timetable for Implementation (May 2006)

269

(2)

INDEX

271

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Blackstone's Guide to the Consumer Credit Act 2006

Summary

Author Biography

Table of Contents

Supplemental Materials