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Consumer Credit Act 1974 (UK)

This Act, the various provisions of which came into force at different times, is primarily concerned with the hiring of goods by consumcrs as individuals, including sole traders and partnerships, or the sale of goods to those persons on credit terms. It is enforced principally by the office of fair trading but also by the Trading Standards Departments and. in Northern Ireland, the Department of Commerce.

The object is to give a greater degree of protection to innocent consumers against the possibility of their committing themselves to onerous and unforeseen obligations to suppliers and to lawful victimization by the more unscrupulous providers of credit, who disguise exorbitant interest rates and conditions through carefully convincing advertisement.

The main innovation was the intrcxiuction of the need to hold a licence. This licence is obtainable from the Director General appointed under the Act and is only granted where the applicant is considcrcd a suitable person to hold one. A efusal may arise from the past record of the applicant or where he is engaged in improper business practices. There is a right to appeal against such a refusal, initially to the Director and ultimately to the Secretary of State. The licensing requirement was brought into force in stages beginning in February 1976, but the general consumer credit system was not included until later, the closing date from which a licence was legally required being 1 October 1977. It is not possible to cover the legislation relating to licences here, but pamphlets are avai able from the Consumer Credit Licensing Branch at the Office of Fair Trading or from the nearest H.M.S.O bookshop.

Generally speaking, anyone engaged in business where credit is given or hinn] arrangements made needs a licence. So also do those concerned with credit reference or debt-collecting. There are specific minor exemptions and a general ‘blanket’ exemption to cover shopkeepers who allow monthly credit terms or credit purchases t be repaid in fewer than four instalments. Licences issued are recorded in a public register maintained by the Office of Fait] Trading and this register is available foi inspection. There are heavy penalties for indulging in credit trading of a type covered by the Act without holding a current licence. A licence will normally last for three years but can be revoked if the Director so decides.

The Consumer Credit Act is not only concerned with licensing. It also affords other protective measures, e.g.: (1) credit sales agreements will usually ned to be in writing and contain details of all rights and obligations of the debtor together with the true cost of the credit. This latter also applies to advertisements, which must disclose the true annual interest rate being charged; (2) when agreements are made other than on the shop premises the consumer will normally be entitled to change his mind, i.e. the contract will not be enforceable until a certain time has elapsed – the ‘cooling-off period. Even after that the consumer will be able to appeal to the court if the terms arc cxtortionate; (3) the consumer will usually have the right to pay off the debt before the agreed date and have a statutory rebate of charges already made for the additional period; (4) where the credit is given by a company other than the supplier of the goods then, if the credit is arranged by the supplier, both he and the creditor are equally liable under the arrangement; (5) any consumer has the right to a copy ot any file on him kept by a credit reference agency and additionally the right to have such a file corrected where it is in error.

Reference: The Penguin Business Dictionary, 3rd edt.