Consumer Credit Act 2006
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The Consumer Credit Act 2006 (which was fully implemented on 1 October
2008) establishes a fairer, clearer and more competitive market for consumer
credit, updating consumer credit legislation that had been in place since the
1970s, and making it more relevant to today’s consumers.
The Act was implemented in 3 phases:
6 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.
6 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, and the Unfair Relationships Test was extended to all existing credit
agreements.
1 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 licence, 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)
About the Author
© Crown Copyright. Material taken from the BERR- Department
for Business, Enterprise and Regulatory Reform replacing DTI - Department for
Trade and Industry. Reproduced under the terms and conditions of the Click-Use
Licence.
