New regulations governing the form and content of credit agreements came fully into force on 1 February 2011, implementing relevant provisions of the Consumer Credit Directive (CCD).
The 2010 regulations apply to unsecured credit including loans, hire-purchase, credit cards and overdrafts. They may also apply to some secured credit.
The regulations require certain information to be set out in the credit agreement. The information must be clear and concise and easily legible, and certain information must be included in the document the borrower signs. There are special rules for overdrafts and pawnbroking.
In addition, provisions in the Consumer Credit Act govern the supply of copy agreements and statements on request.
If the requirements are not followed, the agreement will be unenforceable without a court order.
The changes to the Act as a result of CCD implementation are contained in the Consumer Credit (EU Directive) Regulations 2010.
A summary of the 2010 regulations and the CCD changes is in chapter 10 of the BIS guidance on the regulations implementing the Consumer Credit Directive.
The 1983 regulations (as amended in 2004) continue to apply to most secured credit and consumer hire agreements.
These regulations are available from the National Archives.
Where it is impracticable for a person carrying on a regulated consumer credit business or consumer hire business to comply with particular requirements of the 1983 regulations (or the 2010 regulations for certain types of credit agreement), they may apply to the OFT for a Direction under section 60(3) of the Act to waive or vary the requirements. The applicant must satisfy the OFT that it is impracticable to comply and that granting the Direction would not prejudice the interests of debtors or hirers. The Direction may be made subject to conditions.
To apply for a Direction, download and complete form CCD 91/12 (Word 112kb).
In addition, a person carrying on a regulated consumer hire business can apply to the OFT for a Direction under Section 101(8) of the Act to vary the right to terminate a hire agreement, provided that this would be in the interests of hirers.
To apply for a Direction, download and complete forms CCD34/83 (Word 85kb) and CCD35/83 (Word 101kb).
You may wish to supply additional information (pdf 50kb) in support of your application.
From 11 April 2011, Applications for directions under sections 101 and 60 of the Consumer Credit Act will be charged at £1000.
Cheques must be made out to 'The Office of Fair Trading' and sent to:
Consumer Credit Licensing
PO Box 62691
For information concerning the determination made by the Office of Fair Trading in respect of section 74(1)(b) of the Consumer Credit Act 1974, download GN34 General determinations under section 74(3) - 21 December 1989 (pdf 372kb).
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