Consumer Credit Act 1974

Valid from 01/02/2011

[F155APre-contractual explanations etcU.K.

(1)Before a regulated consumer credit agreement, other than an excluded agreement, is made, the creditor must—

(a)provide the debtor with an adequate explanation of the matters referred to in subsection (2) in order to place him in a position enabling him to assess whether the agreement is adapted to his needs and his financial situation,

(b)advise the debtor—

(i)to consider the information which is required to be disclosed under section 55(1), and

(ii)where this information is disclosed in person to the debtor, that the debtor is able to take it away,

(c)provide the debtor with an opportunity to ask questions about the agreement, and

(d)advise the debtor how to ask the creditor for further information and explanation.

(2)The matters referred to in subsection (1)(a) are—

(a)the features of the agreement which may make the credit to be provided under the agreement unsuitable for particular types of use,

(b)how much the debtor will have to pay periodically and, where the amount can be determined, in total under the agreement,

(c)the features of the agreement which may operate in a manner which would have a significant adverse effect on the debtor in a way which the debtor is unlikely to foresee,

(d)the principal consequences for the debtor arising from a failure to make payments under the agreement at the times required by the agreement including legal proceedings and, where this is a possibility, repossession of the debtor's home, and

(e)the effect of the exercise of any right to withdraw from the agreement and how and when this right may be exercised.

(3)The advice and explanation may be given orally or in writing except as provided in subsection (4).

(4)Where the explanation of the matters specified in paragraphs (a), (b) or (e) of subsection (2) is given orally or in person to a debtor, the explanation of the matters specified in paragraphs (c) and (d) of that subsection, and the advice required to be given by subsection (1)(b), must be given orally to him.

(5)Subsections (1) to (4) do not apply to a creditor if a credit intermediary (see section 160A) has complied with those subsections in respect of the agreement.

(6)For the purposes of this section an agreement is an excluded agreement if it is—

(a)an agreement under which the creditor provides the debtor with credit which exceeds £60, 260, or

(b)an agreement secured on land.

(7)Where the regulated consumer credit agreement is an agreement under which a person takes an article in pawn—

(a)the obligation in subsection (1)(a) only relates to the matters listed in paragraphs (d) and (e) of subsection (2), and

(b)the obligations in subsection (1)(b) and (d) do not apply.]

Valid from 01/02/2011

[F255BAssessment of creditworthinessU.K.

(1)Before making a regulated consumer credit agreement, other than an excluded agreement, the creditor must undertake an assessment of the creditworthiness of the debtor.

(2)Before significantly increasing—

(a)the amount of credit to be provided under a regulated consumer credit agreement, other than an excluded agreement, or

(b)a credit limit for running-account credit under a regulated consumer credit agreement, other than an excluded agreement,

the creditor must undertake an assessment of the debtor's creditworthiness.

(3)A creditworthiness assessment must be based on sufficient information obtained from—

(a)the debtor, where appropriate, and

(b)a credit reference agency, where necessary.

(4)For the purposes of this section an agreement is an excluded agreement if it is—

(a)an agreement secured on land, or

(b)an agreement under which a person takes an article in pawn.]

Valid from 01/02/2011

[F355CCopy of draft consumer credit agreementU.K.

(1)Before a regulated consumer credit agreement, other than an excluded agreement, is made, the creditor must, if requested, give to the debtor without delay a copy of the prospective agreement (or such of its terms as have at that time been reduced to writing).

(2)Subsection (1) does not apply if at the time the request is made, the creditor is unwilling to proceed with the agreement.

(3)A breach of the duty imposed by subsection (1) is actionable as a breach of statutory duty.

(4)For the purposes of this section an agreement is an excluded agreement if it is—

(a)an agreement secured on land,

(b)an agreement under which a person takes an article in pawn,

(c)an agreement under which the creditor provides the debtor with credit which exceeds £60, 260, or

(d)an agreement entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.

(5)Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement)

apply for the purposes of subsection (4)(d).]