For Consumers
The Consumer Credit Act 2006 is good for consumers as it allows them to exercise their rights more effectively, challenge unfair conduct by lenders and to obtain redress and be better informed about the state of their accounts (allowing them to manage their financial affairs more effectively).
Ombudsman Scheme
Consumers who are not happy with the response of a consumer credit business to their complaint, can take their complaint to the Financial Ombudsman Service (FOS). FOS’ remit was extended (from covering 70% of the financial services market) to cover all consumer credit businesses on 6 April 2007 . FOS is free and is a quicker, easier and less stressful way for consumers to resolve disputes than going to court. For more information, contact the Financial Ombudsman Service.
Unfair Relationships Test
The unfair relationships test provides consumers with a broad right to challenge unfair credit relationships in court. The court has the power, if it finds that a relationship between a debtor or creditor is unfair, to remedy the unfairness by reopening the agreement or even setting it aside. The introduction of this test (which applies to all existing agreements since April 2008) should mean credit businesses operate fairly, , competition is improved and standards are therefore raised across the industry. For more information, contact the Office of Fair Trading (OFT).
Better information for consumers
On 1 October the information requirements came into force. This means that consumers will be kept informed of the status of their accounts throughout the life of their agreement as lenders will be required to provide regular statements and information when there are problems, such as going into arrears. For more information, contact the OFT.
Credit Agreements over £25,000
In April 2008, the financial limit of £25,000 was removed for new agreements so now all consumer borrowing (unless specifically exempt) regardless of value is protected under the Act.