The Consumer Credit Bill has been published, on 16
December 2004.
It amends the Consumer Credit Act 1974 (the "1974
Act"), and has in mind the need to extend to consumers the benefit
of an ombudsman to hear complaints in connection with agreements
regulated by the Act (similar to the Financial Ombudsman's role in
relation to the operation of bank accounts). It
also aims to limit the injury done to consumers by rogue
lenders.
The 1974 Act is the statute governing
· the licensing of,
and other controls, on traders concerned with
· the provision of
credit or the supply of goods on hire or hire-purchase to
individuals and with
· the
regulation of transactions concerning that provision or that
supply.
The BBA commented yesterday, 16 December 2004 "The
existing Consumer Credit Act has served us well, but it is 30 years
old and the consumer credit environment has changed dramatically
during that period." (Ian Mullen, Chief Executive BBA).
The Bill aims to reform the 1974 Act to:
· provide for the
regulation of all consumer credit and consumer hire agreements
subject to certain exemptions;
· make
provision in relation to the licensing of providers of consumer
credit and consumer hire and ancillary credit services and the
functions and powers of OFT in relation to licensing;
· enable
debtors to challenge unfair relationships with creditors; and
· provide for
an Ombudsman scheme to hear complaints in relation to businesses
licensed under the Act.
Short Background
In July 2001, the Secretary of State for Trade and
Industry announced a review of the 1974 Act.
The review addressed the existing regulation of
information disclosure, early settlement, unfair credit
transactions, consumer credit licensing, the financial limit above
which agreements are not regulated under the 1974 Act and consumer
redress. The review resulted in the White Paper
"Fair, Clear and Competitive - The Consumer Credit Market in the
21st Century" December 2003.
The review also considered the problem of
over-indebtedness in the United Kingdom, and the ways in which
government, working with industry and consumer representatives and
advisers, can tackle this issue. This led to the publication of the
joint DTI and Department for Work and Pensions paper "Tackling
Over-indebtedness - Action Plan 2004".
The Government's responses to these consultations
may be found by clicking here.
Regulations and Orders have already been passed to
deal with the issues of pre-contractual disclosure, advertising and
early settlement.
The remaining proposals for reform (relating to
unfair credit relationships, consumer credit licensing, the
financial limit and consumer redress) require primary legislation
to amend the 1974 Act and other legislation and are dealt with in
this Bill.
Overview Of The Structure
The main areas covered by the Bill are:
· the
regulation of consumer credit agreements and consumer hire
agreements;
· the provision of
information to debtors and hirers after the agreement is made;
· unfair
relationships between debtors and creditors;
· the licensing of
consumer credit and hire businesses and ancillary credit
businesses;
· the powers of OFT
in relation to the licensing of consumer credit and hire businesses
and ancillary credit businesses;
· appeals from
decisions of OFT in relation to the licensing of consumer credit
and hire businesses and ancillary credit businesses; and
· the extension of
the jurisdiction of the Financial Ombudsman Service established
under the Financial Services and Markets Act 2000.
The Bill also amends the following Acts:
· the Financial
Services and Markets Act 2000 as a consequence of the extension of
the jurisdiction of the Financial Ombudsman Service.
· the Bankruptcy
(Scotland) Act 1985, the Insolvency Act 1986 and the Insolvency
(Northern Ireland) Order 1989 as a consequence of the provisions in
the Bill dealing with unfair relationships;
· the Criminal
Justice and Police Act 2001 as a consequence of the provisions in
the Bill concerning powers of OFT in relation to entry into
premises;
· the
Tribunals and Inquiries Act 1992 as a consequence of the provisions
in the Bill concerning the establishment of the Consumer Credit
Appeals Tribunal; and
The Bill is available by clicking
here.
Should you
require further details or advice please contact Ruth Pedley on
+44(0) 20 7367 2098 or at ruth[email protected] or Jean Price on +44(0) 20 7367
3353 or at [email protected]