The Consumer Credit Act 2006, which was implemented on 1st October 2008, establishes a fairer, clearer and more competitive market for consumer credit. The consumer credit legislation which had been in place since the 1970's, has now been updated, making it more relevant to today's consumers.
The Act was implemented in 3 phases:
6th April 2007
- The remit of the Financial Ombudsman Service (FOS) was extended to cover consumer credit and the Unfair Relationships Test was introduced for new agreements.
6th April 2008
- The Office of Fair Trading's (OFT's) new strengthened licensing regime was introduced.
- The Consumer Credit Appeals Tribunal for appeals against the OFT's licensing decisions was established.
- The financial limit of £25,000 was removed so all new credit agreements, unless specifically exempt, are regulated.
- The Unfair Relationships Test was extended to all existing credit agreements.
1st October 2008
- A requirement for lenders to provide borrowers with much more information about their accounts on a regular basis, such as an annual statement and notices when consumers fall into arrears or incur a default sum was introduced.
- The OFT's regulation was extended to credit information and debt administration services, which means debt administration and credit information (repair) service providers need a consumer credit license and consumers can go to the courts asking for longer to pay back their loan (a time order) when they receive an arrears notice. Prior to October, consumers could only seek a time order when they received a default notice.
If you require any advice or guidance regarding changes to the Consumer Credit Act, please contact us.
