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Consumer Credit Act 2006
The Consumer Credit Act 2006 establishes a fairer, clearer and more competitive market for consumer credit, updating consumer credit legislation that has been in place since the 1970s and making it more relevant to today’s consumers.
We are well on the way to implementing the Act. Many key provisions have come into force and the Act is due to be fully implemented by October 2008.
On 6 April 2007, the remit of the Financial Ombudsman Service (FOS) was extended to cover consumer credit and the Unfair Relationships Test was introduced for new agreements. On 6 April 2008, the OFT’s new strengthened licensing regime was introduced, the Consumer Credit Appeals Tribunal (for appeals against OFT licensing decisions) was established, the financial limit (of £25,000) was removed so all new credit agreements (unless specifically exempt) regardless of value are regulated, and the Unfair Relationships Test was extended to all existing credit agreements.
From 1 October 2008, lenders will be required to provide borrowers with much more information about their accounts, such as an annual statement and regular notices when consumers fall into arrears or incur a default sum, and debt administration service providers and credit information (repair) service providers will need a consumer credit licence as these services will be regulated by the OFT.