The Consumer Credit (EU Directive) Regulations 2010
2010 No. 1010
Consumer Credit
The Consumer Credit (EU Directive) Regulations 2010
Made 28th March 2010
Laid before Parliament 30th March 2010
Coming into force in accordance with regulations 99 and 101
The Secretary of State is a Minister designated1for the purposes of section 2(2) of the European Communities Act 19722in relation to measures relating to consumer credit.
The Secretary of State makes these Regulations in exercise of the powers conferred by section 2(2) of the European Communities Act 1972.
PART 1
General
Citation and commencement
1. These Regulations may be cited as the Consumer Credit (EU Directive) Regulations 2010 and shall come into force in accordance with regulations 99 and 101.
PART 2
Amendments to primary legislation
Amendments to Consumer Credit Act 1974
2. The Consumer Credit Act 19743is amended as specified in regulations 3 to 45.
Pre-contractual explanations etc
3. After section 55 (disclosure of information) insert—
“Pre-contractual explanations etc
55A.—(1) Before a regulated consumer credit agreement, other than an excluded agreement, is made, the creditor must—
(a)
(a) provide the debtor with an adequate explanation of the matters referred to in subsection (2) in order to place him in a position enabling him to assess whether the agreement is adapted to his needs and his financial situation,
(b)
(b) advise the debtor—
(i) to consider the information which is required to be disclosed under section 55(1), and
(ii) where this information is disclosed in person to the debtor, that the debtor is able to take it away,
(c)
(c) provide the debtor with an opportunity to ask questions about the agreement, and
(d)
(d) advise the debtor how to ask the creditor for further information and explanation.
(2) The matters referred to in subsection (1)(a) are—
(a)
(a) the features of the agreement which may make the credit to be provided under the agreement unsuitable for particular types of use,
(b)
(b) how much the debtor will have to pay periodically and, where the amount can be determined, in total under the agreement,
(c)
(c) the features of the agreement which may operate in a manner which would have a significant adverse effect on the debtor in a way which the debtor is unlikely to foresee,
(d)
(d) the principal consequences for the debtor arising from a failure to make payments under the agreement at the times required by the agreement including legal proceedings and, where this is a possibility, repossession of the debtor’s home, and
(e)
(e) the effect of the exercise of any right to withdraw from the agreement and how and when this right may be exercised.
(3) The advice and explanation may be given orally or in writing except as provided in subsection (4).
(4) Where the explanation of the matters specified in paragraphs (a), (b) or (e) of subsection (2) is given orally or in person to a debtor, the explanation of the other matters specified in that paragraph, and the advice required to be given by subsection (1)(b), must be given orally to him.
(5) Subsections (1) to (4) do not apply to a creditor if a credit intermediary (see section 160A) has complied with those subsections in respect of the agreement.
(6) For the purposes of this section an agreement is an excluded agreement if it is—
(a)
(a) an agreement under which the creditor provides the debtor with credit which exceeds £60, 260, or
(b)
(b) an agreement secured on land.
(7) Where the regulated consumer credit agreement is an agreement under which a person takes an article in pawn—
(a)
(a) the obligation in subsection (1)(a) only relates to the matters listed in paragraphs (d) and (e) of subsection (2), and
(b)
(b) the obligations in subsection (1)(b) and (d) do not apply.”.
4. In section 185 (agreement with more than one debtor or hirer)4, after subsection (1) insert—
“1A Notwithstanding subsection (1) above, subsection (4) of section 55A (pre-contractual explanations etc) does not require an oral explanation to be given to any debtor to whom an explanation of the matters referred to in subsection (2)(a), (b) and (e) of that section has not been given orally or in person.”.
Assessment of creditworthiness
5. After section 55A (pre-contractual explanations etc) as inserted by regulation 3, insert—
“Assessment of creditworthiness
55B.—(1) Before making a regulated consumer credit agreement, other than an excluded agreement, the creditor must undertake an assessment of the creditworthiness of the debtor.
(2) Before significantly increasing—
(a)
(a) the amount of credit to be provided under a regulated consumer credit agreement, other than an excluded agreement, or
(b)
(b) a credit limit for running-account credit under a regulated consumer credit agreement, other than an excluded agreement,
the creditor must undertake an assessment of the debtor’s creditworthiness.
(3) A creditworthiness assessment must be based on sufficient information obtained from—
(a)
(a) the debtor, where appropriate, and
(b)
(b) a credit reference agency, where necessary.
(4) For the purposes of this section an agreement is an excluded agreement if it is—
(a)
(a) an agreement secured on land, or
(b)
(b) an agreement under which a person takes an article in pawn.”.
Copy of draft consumer credit agreement
6. After section 55B (assessment of creditworthiness) as inserted by regulation 5, insert—
“Copy of draft consumer credit agreement
55C.—(1) Before a regulated consumer credit agreement, other than an excluded agreement, is made, the creditor must, if requested, give to the debtor without delay a copy of the prospective agreement (or such of its terms as have at that time been reduced to writing).
(2) Subsection (1) does not apply if at the time the request is made, the creditor is unwilling to proceed with the agreement.
(3) A breach of the duty imposed by subsection (1) is actionable as a breach of statutory duty.
(4) For the purposes of this section an agreement is an excluded agreement if it is—
(a)
(a) an agreement secured on land,
(b)
(b) an agreement under which a person takes an article in pawn,
(c)
(c) an agreement under which the creditor provides the debtor with credit which exceeds £60, 260, or
(d)
(d) an agreement entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.
(5) Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement)
apply for the purposes of subsection (4)(d).”.
Information to be included in agreements
7. In section 60 (form and content of agreements), after subsection (4) insert—
“5 An application may be made under subsection (3) only if it relates to—
(a) a consumer credit agreement secured on land,
(b) a consumer credit agreement under which a person takes an article in pawn,
(c) a consumer credit agreement under which the creditor provides the debtor with credit which exceeds £60,260,
(d) a consumer credit agreement entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him, or
(e) a consumer hire agreement.
6 Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement) apply for the purposes of subsection (5)(d).”.
Duty to supply copies
8. After section 61 (signing of agreement), insert—
“Duty to supply copy of executed consumer credit agreement
61A.—(1) Where a regulated consumer credit agreement, other than an excluded agreement, has been made, the creditor must give a copy of the executed agreement, and any other document referred to in it, to the debtor.
(2) Subsection (1) does not apply if—
(a)
(a) a copy of the unexecuted agreement (and of any other document referred to in it) has already been given to the debtor, and
(b)
(b) the unexecuted agreement is in identical terms to the executed agreement.
(3) In a case referred to in subsection (2), the creditor must inform the debtor in writing—
(a)
(a) that the agreement has been executed,
(b)
(b) that the executed agreement is in identical terms to the unexecuted agreement a copy of which has already been given to the debtor, and
(c)
(c) that the debtor has the right to receive a copy of the executed agreement if the debtor makes a request for it at any time before the end of the period referred to in section 66A(2).
(4) Where a request is made under subsection (3)(c) the creditor must give a copy of the executed agreement to the debtor without delay.
(5) If the requirements of this section are not observed, the agreement is not properly executed.
(6) For the purposes of this section, an agreement is an excluded agreement if it is—
(a)
(a) a cancellable agreement, or
(b)
(b) an agreement—
(i) secured on land,
(ii) under which the creditor provides the debtor with credit which exceeds £60,260, or
(iii) entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him,
unless the creditor or a credit intermediary has complied with or purported to comply with regulation 3(2) of the Consumer Credit (Disclosure of Information) Regulations 2010.
(7) Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement) apply for the purposes of subsection...
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