Stakeholder Notice: October 2008
1. This Notice provides an update on implementation of the Consumer Credit Act 2006 (CCA06).
Consumer Credit Act 2006
2. On 1 October 2008, the final provisions of the Act came into force. These relate to post-contract transparency, time orders and new licensing categories of credit information and debt administration services.
3. And on 1 October, Consumer Affairs Minister Gareth Thomas said:
"The Consumer Credit Act helps create a level playing field for business and get consumers a fair deal."
"It puts in place a fairer, more transparent and competitive credit market."
"Borrowers now get better information from lenders, better protection if things go wrong and better protection from the small minority of rogue and incompetent traders that give honest businesses a bad name."
4. BERR have worked closely with partners and stakeholders during the progress of the Act and its implementation and are grateful for the help and cooperation they have received throughout.
5. Some key partners and stakeholders have made the following comments in relation to full implementation of CCA06:
Ray Watson, OFT Director of Consumer Credit:
“These further reforms to the licensing regime are important steps in protecting consumers, especially given the current economic climate where access to mainstream sources of credit may become more difficult – particularly for consumers with adverse credit ratings."
"Businesses should be aware that if they offer credit information services without holding an appropriate licence, they will be committing a criminal offence and risk prosecution, and that any agreements they enter into with consumers whilst unlicensed may be unenforceable.”
Joanna Elson, Chief Executive of the Money Advice Trust:
“We warmly welcome the implementation of the final provisions of the Consumer Credit Act 2006 which increases protection for vulnerable consumers. We were delighted to assist the OFT with drafting the new information sheets to accompany the arrears and default notices. We are pleased that the key message for consumers to seek free advice and help with their debt problems comes across. This is most timely given the current economic circumstances where we are seeing an increase in demand across the advice sector and at National Debtline a 30% increase in demand in July to September compared to the same period in 2007. “
Angela Knight, Chief Executive of the British Bankers' Association:
"The measures implemented today will extend the protections afforded to consumers by bringing more agreements within the regulations. Banks have worked closely with BERR to prepare for a smooth transition to the new requirements."
6. For further information on:
- the post-contract transparency requirements visit: www.oft.gov.uk/advice_and_resources/resource_base/legal/cca/Postcontractinfo
- applying for a time order in England & Wales visit: www.nationaldebtline.co.uk/england_wales/factsheet.php?page=06_time_orders and applying for a time order in Scotland visit: www.nationaldebtline.co.uk/scotland/factsheet.php?page=13_time_orders (will be updated shortly)
- the new licensing categories visit: www.oft.gov.uk/advice_and_resources/resource_base/legal/cca/CCA2006/new-categories/
Legislative Reform (Consumer Credit) Order 2008
7. The draft Order will be debated in the House of Lords on 8 October. Subject to final approval in the Lords, we plan to bring the LRO into force on 31 October 2008.
8. Further information on the LRO can be found on the BERR website at: www.berr.gov.uk/consumers/consumer-finance/credit-act-2006/documents/index.html
Post-contract information requirements – gone aways and IVAs
9. Ministers are currently considering a detailed paper on all the possible options (including “do nothing”) to address the issue of the requirement to send post-contract information to customers who have either “gone away” or agreed an IVA. We will update stakeholders once a decision on the way forward has been made.
OFT consultation on scoping of irresponsible lending project
10. As mentioned in previous Notices, the OFT is currently consulting on the scope of a project covering the irresponsible lending element of the fitness test introduced by CCA06 in April 2008. The consultation, which closes on 24 October, can be found at www.oft.gov.uk/news/press/2008/91-08
Further information on the Consumer Credit Act 1974 (as amended by CCA06)
11. Background on CCA06 can be found on the BERR website
12. Queries regarding interpretation of the Consumer Credit Act 1974 (as amended by CCA06) or the regulations should be sent to the OFT using the following email address: credit.guidance@oft.gsi.gov.uk
13. Any policy queries on the Consumer Credit Act should be sent to Consumer.Credit@berr.gsi.gov.uk