Stakeholder Notice - December 2006
This note provides an update on arrangements to implement the Consumer Credit Act 2006. It relates specifically to: the transitional arrangements for the application of unfair relationships provisions to existing agreements; the bringing into force of the new definition of individual for the purposes of the Act; and to clarify the position regarding the sending of notices to clients that are deceased or who have gone away.
Transitional Arrangements For Application Of Unfair Relationships Provisions To Existing Agreements
The Minister for Trade, Investment and Foreign Affairs has taken a decision that we will not be consulting on extending the transitional period for the application of the unfair relationships provisions to existing agreements. The last day of this transitional period will therefore be 5 April 2008.
This decision was taken after carefully considering representations made on both sides and the lack of any concrete evidence to support extending the transitional period.
We are not introducing new standards of reasonable behaviour. Fair lenders will have nothing to fear as the new provisions reflect standards that the industry has long imposed on itself. It is not right that consumers whose lenders may have behaved unfairly and continue to do so should have no remedy.
New Definition of Individual
The new definition of individual will come in to force on 6 April 2007, which is the next Common Commencement Date. Earlier, we indicated that we would bring the new definition into force late in 2006, but we have delayed this date in order to be consistent with the introduction of other provisions of the 2006 Act and to give industry more time in which to comply with the new definition.
The new definition will restrict the level consumer protection available to individuals to natural persons and very small businesses.
Deceased and Gone Away
To clarify the position regarding the Consumer Credit Act 2006 requirement to send notices and statements to customers where:
• the debtor is known to be deceased, but the lender has not yet been informed of the appointment of an executor for the estate; or
• the debtor has 'gone away', i.e. moved, and not informed the lender of their new contact address.
Under the Consumer Credit Act 2006 lenders will have an obligation to their customers to provide them with regular statements in relation to their credit agreements. This measure is designed to ensure that consumers are kept aware of any activity on their account, including fees and charges, which will enable them to better manage their borrowing.
If a lender wishes to preserve their right to charge interest and take enforcement action where necessary, this obligation means that they must continue to send such information to the last known address of the customer, even though the customer may have died or 'gone away', i.e. changed address without informing the lenders of their new contact details.
Ends.