We will all have been used to the Consumer Credit Act established in 1974. This has now however had some major overhauls drip fed through, so please see a brief overview below, highlighting the changes that could impact on your clients when taking credit.
The Consumer Credit Act 2006 establishes a fairer, more clear and more competitive market for consumer credit. It updates consumer credit legislation that has been in place since the 1970s and making it more relevant to today’s consumers.
Many key provisions have come into force and the Act is due to be fully implemented by October 2008.
On 6 April 2007, the remit of the Financial Ombudsman Service (FOS) was extended to cover consumer credit, and the Unfair Relationships Test was introduced for new agreements. On 6 April 2008, the Office of Fair Trading (OFT)’s new, strengthened licensing regime was introduced, the Consumer Credit Appeals Tribunal (for appeals against OFT licensing decisions) was established, the financial limit (of £25,000) was removed so all new credit agreements (unless specifically exempt), regardless of value, are now regulated, and the Unfair Relationships Test was extended to all existing credit agreements.
From 1 October 2008, lenders will be required to provide borrowers with much more information about their accounts, such as an annual statement and regular notices when consumers fall into arrears or incur a default sum. Debt administration service providers and credit information (repair) service providers will need a consumer credit licence as these services will be regulated by the OFT.
This is likely to lead to tier 2 & 3 lenders withdrawing from consumer agreements, where as before they were generally willing to transact outside of the act i.e. advances over £25,000. This may mean it becomes harder for clients without a prime lender track record to obtain funding.
Please contact a member of the Vantis Asset Finance team, who will be able to assist in these transactions.