Stakeholder Notice March 2007
1. This note provides an update on arrangements to implement the Consumer Credit Act 2006. It relates specifically to: the Government's response to theAugust 2006 consultation on the Statutory Instruments covering exemptions, post contract information and licensing; PricewaterhouseCoopers' report on the challenges facing industry in meeting the requirements of the Act, as set out in the August 2006 draft Statutory Instruments; and our revised Statutory Instruments.
2. Comments are being sought on any remaining points of detail in the revised Statutory Instruments by noon on Monday 19 March. We have worked closely with industry and consumer groups throughout the consultation process to ensure that the revised SIs realise the consumer benefits we want to see, but in a way that is proportionate. We regret that we will be unable to take into consideration any comments received after this deadline, as we need to finalise the SIs and lay them by 6th April 2007.
3. Responses should be sent directly to me either by post or e-mail: Mike Warnes; Department of Trade and Industry; Bay 428; 1 Victoria Street; London SW1H 0ET. E-mail address: mike.warnes@dti.gsi.gov.uk.
Key changes as a result of the consultation.
4. In August 2006, DTI sought views on draft statutory instruments covering exemptions, post contract information and licensing under the Consumer Credit Act 2006. As a result of the consultation, and ongoing discussion with industry and consumer groups, we have made significant revisions to the Statutory Instruments.
The main changes are:
• We are relaxing the requirement for prescribed information to be shown as a whole and without interspersion.
• We are no longer requiring lenders to provide certain pieces of information on periodic fixed-sum statements for existing accounts. However, lenders will be required to indicate what information has not been included and make it available upon request.
• We have removed the requirement to estimate a new end date for the agreement for periodic fixed-sum statements.
• We are extending the implementation for the post-contract transparency provisions period by six months in order to reduce the risks for both lenders and consumers. However, the removal of the £25,000 financial limit will still come into force at the earlier date of 6 April 2008.
• We are making the arrangements for the certification of an individual's high net worth status more flexible, and balanced this by an increase in the relevant income and asset thresholds.
• We will address the fact that not all lending over £25,000 for the purpose of buy-to-let will fall outside the scope of the Act, as was the intention. Currently, the Act only exempts buy-to-let that is wholly or predominantly for business purposes.
PricewaterhouseCooper Report
5. We commissioned PricewaterhouseCoopers (PwC) to provide an independent analysis of the challenges facing industry in meeting the requirements of the Act in terms of both time and cost. The report suggested that the costs would be significantly higher than estimated and that industry would need more time in which to comply with the regulations.
6. Throughout the consultation process we have worked with industry and consumer groups to ensure that the costs of implementing the regulations are proportionate to the consumer benefits. As a result, we have already made a significant reduction in the potential overall costs.
7. PwC's report is being published alongside our response to the consultation as it gives additional evidence to support many of the changes we have made to the Statutory Instruments.
12 March 2007
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