The Consumer Credit Act 1974 (c 39) is an Act of the Parliament of the United Kingdom that significantly reformed the law relating to consumer credit within the United Kingdom. Prior to the Consumer Credit Act, legislation covering consumer credit was slapdash and focused on particular areas rather than consumer credit as a whole, such as moneylenders and hire-purchase agreements. The Act introduces new protection for consumers and new regulation for bodies trading in consumer credit and related industries. The Act was amended by the Consumer Credit Act 2006.
This act was followed by the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882, which provided limited protection for debtors. Part II contains definitions for many types of agreements covered by the Act. There are three main types of agreement; regulated consumer credit agreements, regulated consumer hire agreements and partially regulated agreements.
As such the decision of courts as to whether an agreement constituted an "agreement" under the Act rests with English contract law, and is not discussed within the Act. Partially regulated agreements are those consumer hire or consumer credit agreements which are not an exempt agreement but are exempt from certain provisions of the Act. What these provisions are depends on the type of agreement; small agreements, non-commercial agreements and contracts with a foreign element. Small agreements are defined in Section 17 of the act as regulated consumer credit agreements where the credit does not exceed £30 and regulated consumer hire agreements which do not require the hirer to pay more than £30 in fees. Non-commercial agreements are defined by the Act as agreements where neither the creditor nor debtor are providing the transaction for business purposes in any way. Non-commercial agreements are exempt from Part V of the Act. The previous Acts on commercial credit provided no mechanism to regulate and enforce the rules, and the Consumer Credit Act's licensing system was the first major regulatory process within British consumer credit law. Licenses are required to carry out a consumer credit or consumer hire business, with exceptions for local authorities and corporate bodies allowed by an Act of Parliament to carry out consumer credit business. Credit brokerage Advertisements are not regulated by the Act if the advertiser is not involved in a consumer credit business, consumer hire business or a business in which he provides credit to individuals. Part V of the Act deals with four elements of entering into a credit or hire agreement; pre-contract disclosure, the formalities of entry into a regulated agreement, cancellation of a regulated agreement and its consequences and withdrawal from a prospective regulated agreement and its consequences. Section 61 lays out the formalities required for a regulated agreement. Credit (Agreements) Regulations 1983 (SI 1983/1553) 1983 No 1553 "Consumer Credit (Agreements) Regulations 1983"). Part V contains several provisions relating to the cancellation of a regulated agreement and the withdrawal from a prospective regulated agreement. These are similar to those found in the Hire-Purchase Act 1965, but cover all consumer credit and consumer hire agreements rather than the hire-purchase and instalment sale agreements previously covered. Part IX gives the courts wide powers to re-open credit deals deemed extortionate and gives them control over regulated agreements. The time orders can also cover statutory bailment in the case of hire-order or hire-purchase agreements. Other orders are "special orders", covered by Section 133 of the Act. Return orders are orders from the court requiring the return of goods covered by the agreement to the creditor. It was rarely used in the field of consumer credit because it was limited to those sorts of consumer transactions covered by the Moneylenders Act, and did not cover hire-purchase agreements or instalment sale agreements or loan transactions from people who were not moneylenders, such as banks. The Consumer Credit Act provided guidelines for the court in determining whether a credit bargain is extortionate and extends the court’s jurisdiction in this area to cover all credit agreements. This only covers consumer credit agreements, not hire agreements.
An ancillary credit business is defined in Section 145 of the Act as any business that works in credit brokerage, debt adjusting, debt collecting, debt counselling or as a credit reference agency. Debt counselling is the giving of advice to debtors or hirers about the liquidation of debts under consumer credit or consumer hire agreements. Debt collectors are covered by similar provisions, and are defined as anybody who takes steps to "procure payment of debts due" under consumer credit agreements and consumer hire agreements. Part III of the Act applies directly to ancillary credit businesses, who must obtain a license. As with standard credit agreements, agreements made by an unlicensed ancillary trader are only enforceable against the other party if the Director General of Fair Trading issues an order which applies to the agreement. The Act also limited the brokerage fees that credit brokers can charge. The Act repealed the Hire-Purchase Act 1965, the Advertisements (Hire Purchase) Act 1967, the Moneylenders Act 1900, the Moneylenders Act 1927, the Pawnbrokers Act 1872 and the Pawnbrokers Act 1960.
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