6 - The consumer credit Acts and the lending code Flashcards
What is the main piece of legislation that covers consumer credit and aims to provide
protection for the consumer by licensing credit providers and other organisations?
The Consumer Credit Act 2006 reformed the Consumer Credit Act 1974.
How does the consumer credit act aim to create a fairer and more transparent credit market?
- Enhancing consumer rights and redress
- Improving regulation by streamlining the licensing system.
-Making regulation more appropriate for different types of transactions.
How does the credit consumer act define ‘credits’?
Any form of financial accommodation where goods and services are sold to a buyer without any immediate payment.
What are the two types of credit agreements?
- restricted use – these apply to the acquisition of goods and services.
- unrestricted use – these apply to obtaining cash loans that can be used for any purpose.
When is a consumer credit agreement established?
When the person granting the loan provides the person obtaining the loan with the credit.
How many partners can a partnership have to fall under the term ‘individual’ in the consumer credit act definition?
3 or less.
To fall in the consumer credits act definition of ‘individual’ how much must the loan be under?
There is no limit.
What are the two exemptions to the ‘no limit’ for individuals under the consumer credit act?
- where the lending is to a business and is for over £25,000
- where the lending is to a high net worth borrower who has provided a valid declaration of their high net worth.
To qualify for exemption of ‘individual’ due to lending to a business over £25k what must happen?
the agreement contain a declaration which is signed by the debtor.
If a borrower is claiming high net worth exemption what must they supply the lender?
statement which evidences that:
* for the last financial year, either their net income after tax and national insurance
was more than £150,000, or
* their net assets exceeded £500,000 but this cannot take into account the value of
the borrower’s house, certain life assurance policies or pension entitlements.
What does APR stand for?
Annual percentage rate
What must happen is APR is included in advertisment?
It must be more prominent than all other financial information
How are banking licences granted?
On an ongoing basis with the capacity for the FCA to review or limit at any time.
What does the consumer rights act 2015 cover?
what should happen when goods are faulty
* what should happen when digital content is faulty
* how services should match up to what has been agreed,
* unfair terms in a contract
* what happens when a business is acting in a way which isn’t competitive
* written notice for routine inspections by public enforcers, such as Trading Standards
* greater flexibility for public enforcers,
Who can help with disputes that are quicker and cheaper than going through courts?
Certified alternative dispute resolution providers.
What does BCOBS stand for?
Banking conduct of business sourcebook
When did BCOBS come into force?
1/11/2009
Who does BCOBS apply to?
Firms carrying out the activity of accepting deposits from banking customers in the UK. (I.e saving and current accounts).
BCOBS contains rules and guidance on?
- communications with banking customers and financial promotions
- distance communications, including the requirements of the Distance Marketing Directive and E-commerce Directive
- information to be communicated to banking customers, including appropriate information and statements of account
- post-sale requirements
- unauthorised and incorrectly executed payments
- cancellation, including the right to cancel and the effects of cancellation.
where a retail banking service is not a payment service within the scope of the PSRs, what applies?
BCOBS applies in full
where a retail banking service is a payment service within the scope of the PSRs, what does it mean for BCOBs?
Parts of BCOBS would not apply.
What is the lending code?
This is a voluntary code of practice which sets out standards for financial institutions.
Who does the lending code cover?
- Consumers
- Small businesses employing fewer than 10 people and with a turnover of less than €2M
- Charities with an annual income of less than £1M.
What does the Code deal with?
- Loans
- Credit cards
- Charge cards
- Current account overdrafts
