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OFT welcomes Consumer Credit Bill

210/04    16 December 2004

Government plans to modernise consumer credit law, have been welcomed by the OFT.

The OFT has long called for reform to the existing Consumer Credit Act which is 30 years old and now outdated. In particular the OFT welcomes proposals in the Consumer Credit Bill to:

• reform the credit licensing regime, strengthening the OFT's powers including greater sanctions against those who fail to comply with licensing conditions (see press release 55/03)
• create an alternative dispute resolution (ADR) scheme for credit providing a no-cost route for consumers to seek redress where they have been treated unfairly by a consumer credit business
• replace the current extortionate credit provisions so that credit agreements that are unfair can be more effectively challenged through the courts (see press release 76/03).

The existing credit laws were introduced in the 1970s when the availability and use of credit was much more limited than today. Now there are thousands of credit products for consumers to choose from with consumers making much more use of the credit services available.

John Vickers, OFT Chairman, said:

'Reform is necessary to ensure that credit regulation is relevant to today's growing credit market, enabling more effective regulation of the credit industry and greater consumer protection.'

See DTI press release

NOTES

1. The government white paper: 'Fair, Clear and Competitive, The Consumer Credit Market in the 21st Century', was published by the DTI on 8 December 2003.

2. The Consumer Credit Act 1974 requires most businesses that offer goods or services on credit or lend money or are involved in activities relating to credit or hire to be licensed by the OFT. The OFT can refuse or revoke a licence if it decides that a trader is not fit to hold one.

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