BIS, the Department for Business Innovation & Skills has published a quick start guide and more detailed guidance on the regulations implementing the Consumer Credit Directive.

Please see the link for guidance. The regulations come into force on 1 February 2011.

The existing Consumer Credit Act regime is unchanged in relation to agreements secured on land and consumer hire agreements (although lenders may choose to comply with the new requirements in respect of agreements secured on land).

In summary, the regulations make amendments to the following:

  • The right to withdraw from the credit agreement and the requirement to provide adequate explanations. Creditors are required to assess the borrower's creditworthiness before granting credit or significantly increasing the amount of credit. The borrower can withdraw from an agreement within 14 days following conclusion of the agreement or (if later) once the borrower has received a copy of the executed agreement or notification of the credit limit on a credit card.
  • How to set out and calculate the total charge for credit and the annual percentage rate of charge (APR) in advertising and consumer information.
  • What information to provide consumers before they enter into a credit agreement and the way in which that information must be provided. They largely replace regulations on the disclosure of pre-contractual information. The information must be clear and easily legible, and the borrower must be able to take it away to consider and to shop around if he wishes.
  • What information must be included in a credit agreement and how it must be presented and the requirements on the signing of a credit agreement.
  • What information must be included in advertisements for consumer credit agreements and how that information must be presented. If an advertisement includes an interest rate or any amount relating to the cost of credit, it must also include a representative example.
  • The borrower is entitled to seek redress from the creditor in certain circumstances if he is unable to obtain satisfaction from the supplier of goods or services. This applies where s75 of the Consumer Credit Act is not applicable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.