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The Consumer Credit Act 2006

A quick summary of the changes, most of which are to be brought in April 2007 although some bits may be delayed until 2008 and a few are already in force. In the list below any items undated are likely to be brought in 2008 - :

Individual : only includes a partnership of no more than 3 persons (wef 16/06/2006)

Personal credit agreement : renamed as a consumer credit agreement

Financial limits : removed for consumer credit and consumer hire agreements

High net worth debtors : certain rich people can be exempt from the Act's controls where certified annually as such by an expert such as an accountant

Business agreements : where credit of over £25,000 provided, this will be exempt if entered into for the purposes of a business

Definitions of consumer credit and consumer hire businesses : these have been extended to catch a business which acquires an existing regulated agreement from a licensed creditor or owner

Debt administration etc. - new licensing category : extends the definition of debt collecting to other activities in relation to an agreement (Category G)*

Credit information services - new licensing category : any service offering to search credit reference files or to correct any details held by such an agency (Category H)*

OFT's charges for licensing : OFT is now allowed to make charges towards the carrying out of its enforcement duties under the Act, and can choose to make different charges for different types of business (wef 16/06/2006)

OFT licensing guidance : OFT is to publish guidance on the fitness test which it will apply in assessing fitness under s.25 of the 1974 Act

OFT licensing periods : licences may now be valid indefinitely, unless the OFT thinks it should not; group licences shall be time limited unless the OFT considers otherwise. Indefinite licences will still bear periodic charges

OFT powers : OFT may require licensees to comply with extra requirements, and may also require supervisory bodies to comply with requirements; OFT are also given powers to enter licensees' premises, and these powers are extended to authorised officers from other agencies

OFT penalties : OFT is given the power to impose civil penalties up to £50,000

Consumer Credit Appeals Tribunal : this will be set up to hear appeals from OFT decisions

Annual statements on fixed-sum agreements : this was already required for running-account credit, but now other agreements will require an annual summary of the state of the account.

OFT information sheets on arrears and default : OFT has to prepare sheets to advise debtors who in arrears or default (wef 06/04/2007)

Notice of arrears : where a debtor is in arrears by a sum equal to two payments, the creditor must serve an arrears notice within 14 days, and repeat every 6 months while the arrears continue

Default notices - change of notice period : period doubles to 14 days (wef 01/10/2006)

Enforcement orders : Subsections (3) to (5) of Section 127 are repealed (wef 06/04/2007)

Post-judgment interest : the creditor must serve a notice about this on the debtor, and cannot charge for any interest before the notice; it must be repeated every 6 months while the debt continues (wef 06/04/2007)

Unfair relationships : extortionate credit provisions are added to - where a court finds there is an unfair relationship, it may re-open a regulated agreement; things which comprise an unfair relationship include the terms of an agreement, the way in which the creditor is enforcing the agreement, or any other thing done (or not done) by the creditor at any time in relation to the agreement or a related transaction (wef 06/04/2007)

Financial Services Ombudsman : will now deal with any complaint relating to a regulated agreement (wef 06/04/2007).

* The licensing categories are split up, so that D no longer includes debt-counselling. The full list in s.28(4) of the 2006 Act is :

A consumer credit business

B consumer hire business

C Credit brokerage

D debt-adjusting

E debt-counselling

F debt-collecting

G debt-administration

H credit information service

I credit reference agency