Originally published on 10 May 2010
Those dealing with businesses may well think that consumer
credit law is not applicable to the finance they provide. However
the Consumer Credit Act 2006 amended the Consumer Credit Act 1974
(CCA 1974), by abolishing the upper limit for consumer credit
regulation and making various other changes relevant to
businesses.
As a result CCA 1974 applies to credit transactions where the
debtor is a sole trader or a partnership of two or three partners
or an unincorporated body such as a club (unless in each case all
the partners or participants are bodies corporate), as well as to
individual consumers. (It still does not apply where the debtor is
a company or another body corporate).
There are various CCA exemptions which may apply or can be made to
apply if the relevant steps are taken, so it is as well to check
the position before providing finance of any sort to anyone in the
above categories.
Further changes are now being made to the consumer credit regime by
means of regulations which can be found on the Office of Public
Sector Information website (www.opsi.gov.uk).
The Consumer Credit (EU Directive) Regulations 2010 make various
changes to CCA 1974 and its associated regulations to implement the
EU Consumer Credit Directive. Annex A to the related explanatory
memorandum explains the new requirements which will apply to
business lending arrangements covered by CCA 1974.
Other regulations replace existing regulations made under CCA
1974:
- Consumer Credit (Total Charge for Credit) Regulations 2010;
- Consumer Credit (Advertisements) Regulations 2010;
- Consumer Credit (Disclosure of Information) Regulations 2010;
- Consumer Credit (Agreements) Regulations 2010.
As a result this is a good time to review agreements and procedures
if finance is being provided which may fall within the consumer
credit regime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
