If your business sells goods or services on credit, lends money or provides debt counselling or debt adjusting services to consumers, you almost certainly need to be licensed by the OFT.
Providing or arranging consumer credit without a licence is a criminal offence and can result in a fine and/or imprisonment. Businesses cannot legally enforce a credit agreement if they are not licensed.
Before deciding whether to grant you a consumer credit licence, the OFT assesses whether you are a 'fit' person. Once you have a licence, the OFT can revoke it, for example if you are convicted of an offence of violence or dishonesty, or fail to comply with the Consumer Credit Act or other consumer legislation.
Under consumer credit law, you must set out credit and hire agreements in a particular way and make sure they contain certain information. New legislation means that, from April 2007 onwards, unfair credit agreements can be challenged in the courts. There are also rules on how agreements are entered into, and the information that must be provided to consumers.
For more information on consumer credit licenses, see Credit licensing.
The Financial Conduct Authority will take over regulation of consumer credit from the OFT on 1 April 2014. All firms who currently hold a Consumer Credit Licence (CCL) will only be able to trade under their existing CCL until the 31 March 2014. All consumer credit licences expire on this date at midnight and if you have not taken action you will not be able to continue your licensable activities.
All firms who wish to continue trading after 31 March 2014 will need to be registered with the FCA. For more information see credit changes.
The OFT supervises those businesses with a Category A consumer credit licence, under the Money Laundering Regulations. We have published guidance to help you comply with your obligations under the regulations.
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