On 16 October 2010, the OFT published guidance on sections 77 to 79 of the Consumer Credit Act 1974 (CCA) on the duty to give information to debtors and the consequences of non-compliance on the enforceability of the agreement. The guidance sets out:
- The duty to give debtors or hirers a copy of the credit or consumer hire agreement. The guidance also contains details about what it means to provide a "copy" of an executed agreement and considers the decision in Carey v HSBC Bank Plc.
- The duty to give statements of account. The agreement will remain enforceable even if the statement of account turns out to be inaccurate against the terms of the agreement.
- When the duty does not apply. The guidance sets out the limited number of situations where the duty to supply information does not apply.
- What sanctions exist for non-compliance with the duty - i.e. unenforceability of the credit or hire agreement, for as long as the creditor or owner fails to comply with their duty. The OFT considers that a creditor should not, either by act or omission, mislead a debtor as to the enforceability of an agreement. To do so is an unfair or improper business practice and is relevant to the creditor's or owner's fitness to hold a licence under the CCA. It may also be an unfair commercial practice under the Consumer Protection from Unfair Trading Regulations 2008.
- Details about regulatory compliance. Businesses affected by the guidance should take reasonable steps to ensure that they have suitable practices and procedures in place to facilitate and monitor compliance with the guidance.
The OFT has also published guidance for consumers which explains that even when an agreement is unenforceable, the debtor will owe outstanding monies to the creditor or owner, interest and default charges can be added and debtor information can be passed to credit reference agencies.