Transitional provisions in consumer credit law
Note: This is our original regulation update text, published on 7 April 2008. Unlike the rest of our site, this archived material is not updated if the law changes.
Licensed consumer credit providers and mortgage providers in the UK
Took effect on
6 April 2008
From 6 April 2008, all new consumer credit agreements - regardless of their value - will be brought into regulation unless they are specifically exempt.
Transitional provision to exempt buy-to-let lending
The Consumer Credit Act 2006 (which amends the 1974 Act) removed the £25,000 financial limit above which consumer credit agreements were previously unregulated. This provision would have brought buy-to-let agreements within the scope of the 1974 Act and thus into regulation.
To prevent this, buy-to-let lending meeting specified criteria will have an exemption under a Legislative Reform Order (LRO) that is due to come into force on 1 October 2008. Until the LRO comes into force, a transitional arrangement will exempt buy-to-let lending that meets the new criteria from becoming a regulated activity.
Transitional provision for existing unregulated agreements
The lifting of the financial limit only applies to new agreements made on or after 6 April 2008. This means that existing agreements over £25,000 will remain unregulated unless altered.
The transitional arrangement provides that previously unregulated agreements (by virtue of the £25,000 financial limit) will remain unregulated where the variation either does not involve the provision of further credit (in the form of a cash loan), or is itself an exempt agreement.
The transitional does not apply to those agreements where the variation does involve the provision of further credit.
- Find details on the transitional provisions on the Department for Business, Innovation & Skills website - Opens in a new window
Full title of regulation
The Consumer Credit Act 2006 (Commencement No. 4 and Transitional Provisions) Order 2008 [SI 2008 831 (C.40)]
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