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Consumer Credit Act 2006 (Significant changes; (new definition of "…
Consumer Credit Act 2006
Significant changes;
new definition of "individual"
- restricts partnerships to those of 3 or fewer partners. If more - regarded as bodies corporate
abolition of automatic unenforceability
- courts have the discretion to enforce all invalidly executed agreements
Financial Ombudsman Service (FOS)
- customers are entitled to refer complaints to the FOS after they have raised the matter with the licensee.
Unfair relationships
- test which replaced the extortionate credit bargain provisions, widening provisions which apply to all new consumer lendings
Removal of £25,000 limit
- the Act will apply to lending up to any amount
- the limit of £25,000 will remain for business lending
High Net Worth exemption
- the Act will enable wealthy individuals to opt out of regulation (through declaration and a statement of high net worth)
Reform of licensing regime
- OFT - given enhanced powers as regulator, able to impose civil penalties up to £50,000
Post-contract transparency
- periodic statements for fixed sum credit;
- arrears notice;
- requirements relating to default notices;
New categories of business
- debt administration and credit information services - require a consumer credit licence
Rights of the borrower
-
- cancel the finance agreement
( within 5 days of the second copy of the agreement being served on them). Cooling off period.
- early repayment (the right to pay off the whole debt at any tie, with a right to rebate on the credit charges. This right cannot be excluded.
Rights of the lender
- claims for instalments and penalties (if goods are accepted, and there is a default on the payment, the whole amount is due and payable immediately. Penalty charges may become payable.
- Seizure of goods (hire-purchase agreement):
- the borrower fails to meeting the repayments;
- the borrower dies;
- another lender is attempting to claim the goods to meet a judgement debt.
RESTRICTIONS:
- in order to seize goods, the lender must have served a default notice on the borrower, giving him at least seven days to rectify the breach;
- if more than 1/3 of the total price has been paid, the lender has no right to seize the goods without a court order;
- the lender has no right to enter the borrower's premises to seize goods without a court order
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