CC Agreement Regulation

The Consumer Credit Acts regulate specific types of consumer credit businesses in the United Kingdom. They necessitate licensing and impose restrictions on advertising. Licensing holds a central position in consumer credit legislation.

Certain types of entities may not engage in consumer credit activities without obtaining a licence. Revocation of the licence serves as a sanction for failures to comply.

The following businesses are required to hold licences under the Consumer Credit Acts from 1974 to 2006: Consumer credit, consumer hire, credit brokerage, debt cancelling, debt adjusting, debt collecting, credit reference agency, debt administration services, and credit information services.

The licensing requirement applies when the aforementioned activities are conducted in the context of a consumer credit business. This implies a degree of continuity or regularity. If the activity is incidental and sporadic, a licence is unlikely to be necessary.

In most cases, a licence is indefinite and pertains solely to the licence holder. The Office of Fair Trading (OFT) or its successor must be satisfied that the licensee is a suitable individual to engage in licensed activities. The OFT must ascertain that the licensee possesses the necessary skills, experience, honesty, and other qualifications to conduct the business. This requirement extends to both the licensee and to employees, agents, and associates, whether current or former. The OFT may determine that an applicant is unsuitable, and this is not limited to legal activities.

Should the OFT intend to reject an application, it must afford the applicant the opportunity for written representation. An appeal against refusal may be lodged with the Consumer Credit Appeals Tribunal, with a further appeal to the Court of Appeal on a point of law.

A licensee’s licence may be suspended, revoked, or an application for a licence may be denied. The licensee may also be obliged to adhere to specific provisions imposed by the OFT in relation to a particular case. The OFT possesses the authority to impose significant administrative civil sanctions.

It is an offence for an unlicensed entity to engage in activities that require licensing under the Consumer Credit Act. Upon summary conviction, this may result in a fine of up to £2,000 and a maximum of two years imprisonment, or an unlimited fine, or both, upon indictment.

A regulated agreement made by a trader who is not licensed is only enforceable if validated by the OFT. The OFT must take into consideration the extent to which the debtor’s or hirer’s interests are prejudiced, the level of culpability, and whether it would have granted a licence had an application been made.

Creditors and owners, such as those under hire purchase agreements, must ensure that the brokers with whom they transact are also licensed. A regulated agreement made by a debtor or hirer, introduced by an unlicensed broker, is enforceable against the debtor only if a validating order is issued.

An agreement for the services of an unlicensed person engaged in ancillary credit business is similarly unenforceable. This applies in relation to activities as a broker.

In addition to general principles of civil liability and general regulations on misleading advertising, specific advertising controls apply to consumer credit agreements. Advertisements encompass a wide array of promotional materials, including films, catalogues, TV commercials, etc. It constitutes an offence to create or disseminate a false or misleading advertisement.

The advertising regulations mandate plain and intelligible language, clear audibility or legibility, and specification of the advertiser’s name.

Various warnings must be included in specific cases, particularly those pertaining to mortgage agreements. The annual percentage rate of charge must be specified, and certain matters must be given equal prominence and displayed together in accordance with requirements related to credit cash price, advance payments, frequency, and number of instalments in certain cases.

There is a prohibition on soliciting debtor credit agreements from individuals or credit premises. If a debtor is solicited to enter into a regulated agreement through oral representations during a visit to non-trade premises, this provision applies. However, it does not apply to solicited requests, which may be made on a previous occasion.

It is an offence for a person, with the intent of financial gain, to send a minor any document inviting them to borrow money, obtain goods on hire credit, obtain services on a credit card, seek information or advice on borrowing money or obtaining credit, or hiring goods. There is a defence if the person sending the information did not know and had no reasonable cause to suspect that the recipient was a minor.

There are requirements pertaining to the provision of copies of agreements and other information. Failures to comply may render the agreement unenforceable by the creditor or owner unless a court issues an enforcement order or the debtor consents. In such cases, self-help enforcement methods, such as the seizure of goods, are also unlawful. The agreement is not invalidated but becomes unenforceable, subject to a court order.

Obtaining summary judgment on the part of the creditor is subject to impediments.

Regulations stipulate the information that must be provided prior to the creation of an agreement and are periodically amended.

For certain land contracts, there was a prior right to withdraw at least seven days before sending the agreement. A copy containing prescribed information, highlighting the right to withdraw, must be provided to the borrower. The agreement may not be accepted until seven days have elapsed, and the lender must refrain from approaching the borrower during this consideration period.

The content of the agreement itself is prescribed in consumer cases. Requirements relate to the total amount of credit, and certain remedies and rights of the consumer must be highlighted. In the case of a hire purchase agreement, for example, the hirer’s right to terminate must be emphasised and communicated. It must be easily legible and in a colour that distinguishes it from the colour of the paper.

Requirements specify the prominence to be given to certain words and warnings. Financial and related particulars, including APR, total charges, and repayments, must be presented together as a whole and not prior to the agreement.

A document in the prescribed form, containing all the prescribed terms and conforming to the regulations, must be signed in a prescribed manner by the debtor or hirer and by and on behalf of the creditor or owner. It must encompass all the terms of the agreement, excluding implied terms, and must be readily legible.

The document in the prescribed form must also contain prescribed terms in accordance with the regulations and must be signed in a particular manner, by the debtor and on behalf of the lender or owner. It must encompass the full terms of the agreement and must be readily legible.

The debtor or hirer must personally sign the agreement.The debtor or hirer is entitled to at least one copy of the agreement and, in many cases, two. A copy must be provided to the hirer immediately after they have signed. An executed copy must be delivered within seven days after the agreement is made in certain cases.

If the agreement is sent to the debtor or hirer for signature, it must be accompanied by a plain copy. If the creditor or owner subsequently signs, a copy of the executed agreement must be provided within seven days. Proper execution necessitates adherence to the statutory form. The duty to provide an agreement includes an obligation to supply a copy of every other document referred to in the agreements.

Upon written request and payment of a nominal sum, a debtor is entitled to details of records of their payments. A copy of the executed agreement and a signed statement containing certain particulars, including sums paid, due, and payable, to the extent practicable for the debtor to refer to, must be delivered to the debtor. This information need not be provided if the request was made within one month of a previous request. Failure to comply with this provision renders the creditor or owner unable to enforce the agreement. If the default persists for more than a month, an offence is committed. In the case of running credit agreements, except for small agreements, the creditor must send periodic statements at least once a year, containing specified regulations and information.

When a regulated agreement stipulates that the debtor or hirer must retain possession of goods, they must, within seven days of the creditor’s request, provide details of the goods’ whereabouts. Non-compliance by the debtor or hirer constitutes an offence. There are provisions governing the formality and provision of copies in relation to guarantees of regulated agreements.