Office of Public Sector Information

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations prescribe information and forms of wording which must be included in certain statements and notices which creditors and owners are required to give debtors and hirers under the Consumer Credit Act 1974, as amended by the Consumer Credit Act 2006 (the “1974 Act”).

They also stipulate the maximum duration for definite licences issued under the 1974 Act; the period after which the Office of Fair Trading (OFT) is entitled to recover a maintenance charge from licensees under the Act; and the date on which an OFT general notice dealing with such charges is required to be in force (for the purpose of calculating the amount of the charge a licensee is liable to pay).

Regulations 3 to 11 (together with Schedule 1) set out the information and forms of wording which periodic statements given in relation to fixed-sum credit agreements under section 77A of the 1974 Act must contain.

Where a debtor has entered into an agreement under which he makes one payment in relation to his indebtedness under a number of fixed-sum credit agreements (at least one of which is a regulated fixed-sum credit agreement) regulations 7 to 9 permit creditors to aggregate certain figures which are required to be shown in the statement (and appropriate adjustment of certain forms of wording), which would otherwise have to be shown separately in relation to each agreement to which the “agreement to aggregate” (as defined in regulation 2) relates.

Regulation 11 permits the period of a statement which is required to be given under section 77A of the 1974 Act to be flexible up to one year but requires that it be given to the debtor not more than thirty days after the period has come to an end.

Regulation 12 sets out certain additional information which creditors are required to include in periodic statements given in relation to home credit loan agreements (as defined in regulation 3). This regulation implements (in part) the findings of the Competition Commission home credit market investigation report of 30 November 2006, details of which can be found at www.competition-commission.org.uk.

Regulations 13 to 18 (and Schedule 2) set out certain additional forms of wording which statements required to be given in relation to running account credit under section 78(4) of the 1974 Act must contain. Regulation 18 permits the creditor to omit certain wording which it would otherwise be required to include where the total sum of arrears during the relevant period is £1 or less; no additional sums will become payable in connection with the arrears; and the creditor has not taken steps to and does not intend to recover the arrears.

Regulations 19 to 23 (and Parts 1 to 3 and 5 of Schedule 3) prescribe the information and forms of wording which notices of sums in arrears required to be given in relation to fixed-sum credit agreements and hire agreements under section 86B of the 1974 Act must contain.

Regulations 20 to 23 enable aggregation of certain sums (and appropriate adjustment of certain forms of wording) which the notices are required to contain along similar lines to regulations 7 to 9. Regulation 23 permits aggregation of certain figures required to be included in the notice in the event that all the sums payable under the agreement have become due and those sums have been aggregated with sums due under other fixed-sum credit agreements (at least one of which is a regulated fixed-sum credit agreement).

Regulations 24 to 26 (and Parts 4 and 5 of Schedule 3) set out the information and forms of wording required to be included in notices of sums in arrears in relation to running account agreements under section 86C of the 1974 Act. Regulation 26 limits the amount of information and forms of wording which the notice is required to contain where the arrears do not exceed £2 but regulation 26 contains the same conditions as regulation 18.

Regulations 27 to 32 (and Schedule 4) set out the information and forms of wording which notices of default sums given under section 86E of the 1974 Act in relation to regulated agreements are required to contain.

Regulation 33 makes certain amendments to the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 so far as default notices given under section 87 of the 1974 Act are concerned.

Regulations 34 and 35 (together with Schedule 5) contain the information and forms of wording which notices of intention to recover post-judgment interest under section 130A of the 1974 Act are required to include.

Regulations 36 to 40 set out certain requirements in relation to the form of notices and statements to which the Regulations apply. Regulation 41 makes provision regarding the effect of errors which do not affect the information or wording which these Regulations require the notice or statement concerned to contain.

Regulation 42 prescribes that the period for licences of a definite term is five years and regulation 43(2) prescribes the same period for payment of fees in relation to licences of a definite term. Regulation 43(1) provides that the OFT general notice to which reference will be made in order to calculate the maintenance charge payable by licensees is the (relevant) notice which is in force three months before the end of the licensee’s payment period.

Regulation 44 revokes the Consumer Credit (Period of Standard Licence) Regulations 1975 on the grounds that these have been superseded by changes to the 1974 Act.

Regulations 45 to 48 contain transitional provisions concerning notices and statements relating to agreements made before 1st October 2008.

A Regulatory Impact Assessment has been prepared in respect of these Regulations 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.