Consumer Credit Act 2006

Question 1

Consumer Credit Act 2006

Answer 1

• Covers regulation of certain loans, individuals, small partnerships and unincorporated bodies (not companies)

Question 2

Are mortgages included in the consumer credit act 2006?

Answer 2

No, regulated mortgages, including all loans secured on an individual’s main residence are specifically exempt from the act and are regulated under MCOB

Question 3

What is the limit to the consumer credit act and what exemptions exist

Answer 3

• No limit to the amount of a loan covered by the act
• Loans over 25k to small businesses for business purposes are exempt from act
• High net worth borrowers can opt to be exempt from act but it must be at their request

Question 4

How are borrowers protected by the act?

Answer 4

• Borrowers are protected by act include an ordinary borrower or a partnership of 3 or fewer members.
• Borrowers must be given a copy of the credit agreement in writing

Question 5

How are borrowers protected by the act?

Answer 5

• Borrowers are protected by act include an ordinary borrower or a partnership of 3 or fewer members.
• Borrowers must be given a copy of the credit agreement in writing
• There are provisions to increase the fair treatment of borrowers

Question 6

What is the complaints procedure and cancellation provisions

Answer 6

• Complaints relating to credit arrangements can be taken to Financial Ombudsman Service (FOS)
• Borrowers are given cooling period of 14 days from the contract starting or receipt of a copy of the agreement (whichever occurs later) to change their mind.
• Lender must send cooling off notice with a copy of the credit agreement
• Certain agreements do not benefit from right to cancel using cooling off period, examples are bank overdrafts, small loans of £50 or less, small loans of £35 or less completed away from the lender’s premises and loans to pay death duties