Changes in consumer credit licensing, agreement limit values and other procedures

Relevant to
Licensed consumer credit providers, consumer hirers and lenders in the United Kingdom

Took effect on
6 April 2008

From 6 April 2008, changes will apply in consumer credit licensing and regulation.

They will remove the financial limit of £25,000 and bring under regulation virtually all consumer credit agreements - regardless of their value.

Exemptions will apply to agreements that:

• the Financial Services Authority regulates - ie first charge mortgages
• are wholly or predominantly for business purposes and are of a value above £25,000
• involve 'high net worth' customers who meet certain criteria and have opted to be exempt from regulation

The Office of Fair Trading (OFT) will have enhanced powers. For example, OFT will consider your credit competence. This will require you to have the skills to carry out your licensed activities to a reasonable standard and the knowledge to comply with the relevant legislation.

A Consumer Credit Appeals Tribunal will replace the existing system of appeals to the Secretary of State.

From 1 October 2008, you must be licensed if your business provides debt administration or credit information services. From 6 April onwards, you will be able to apply for one of these new categories of credit business or vary your existing licence to include one or both of the new categories.

As of October, new rules will set out what information you must include in statements and notices to consumers. For example, you will have to:

• provide a periodic statement at least once a year
• alert borrowers when problems arise
• inform consumers about interest charges while they are paying off any judgment sum imposed by a court

• Check the working timetable for implementation of the Consumer Credit Act 2006 on the Department for Business, Innovation & Skills (BIS) website - Opens in a new window
• Access a range of documents and guidance on the new provisions on the OFT website - Opens in a new window

Full title of regulation
The Consumer Credit (Information Requirements and Duration of Licences and Charges) Regulations 2007 [SI 2007 1167]; The Consumer Credit (Exempt Agreements) Order 2007 [SI 2007 1168]; The Consumer Credit Act 2006 (Commencement No. 3) Order 2007 [SI 2007 3300 (C. 136)]

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