Article 6
A declaration for the purposes of article 6 must have the following form and content—
I am/We are* entering this agreement wholly or predominantly for the purposes of a business carried on by me/us* or intended to be carried by me/us.*
I/We* understand that I/we* will not have the benefit of the protection and remedies that would be available to me/us* under the Consumer Credit Act 1974 if this agreement were a regulated agreement under that Act.
I/We* understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the creditor and the debtor is unfair to the debtor.**
I am/We are* aware that, if I am/we are* in any doubt as to the consequences of the agreement not being regulated by the Consumer Credit Act 1974 I/we should seek independent legal advice.”.
*Delete as appropriate.
**This section should be omitted in the case of a consumer hire agreement.
(This note is not part of the Order)
This Order provides for the exemption of consumer credit agreements or consumer hire agreements from regulation under the Consumer Credit Act 1974 where the debtor or hirer has a high net worth. It also makes provision about declarations where agreements are entered into wholly or predominantly for the purposes of the debtor’s or hirer’s business.
Article 2 sets out the conditions for the exemption for a person of high net worth. These include the requirements that the debtor or hirer is a natural person and that the agreement must include a declaration by the debtor or hirer complying with article 3. The declaration must also have the form and content set out in Schedule 1.
Another condition for the exemption is that a statement of high net worth has been made in relation to the debtor or hirer. Articles 4 and 5 set out who is able to give the statement and Schedule 2 sets out the form and content the statement must have.
Section 16B of the Consumer Credit Act 1974 provides for the exemption from regulation under that Act of consumer credit agreements or consumer hire agreements, which are entered into wholly or predominantly for the purposes of the debtor’s or hirer’s business where the credit provided or hire payments made exceed £25,000. Section 16B(2) of the Act provides that there shall be a presumption that an agreement is entered into wholly or predominantly for the purposes of the debtor’s or hirer’s business if the agreement includes a declaration by the debtor or hirer to that effect. The Order provides that a declaration for the purposes of section 16B(2) must comply with the requirements in article 6 and have the form and content set out in Schedule 3.
A Regulatory Impact Assessment has been prepared in respect of this Order and may be viewed at http://www.dti.gov.uk/consumers/consumer-finance/credit-act-2006/documents. Impact was also considered as part of the Regulatory Impact Assessment, which accompanied the Consumer Credit Bill when it was introduced into the House of Commons in May 2005.