The Department of Trade and Industry (DTI) has published the response to its August 2006 consultation on draft statutory instruments covering exemptions, post contract information and licensing under the Consumer Credit Act 2006 (CCA 2006). These form one part of the package of new consumer credit regulations that are being implemented between 1 October 2006 and 1 October 2008.
The response gives a summary of the views expressed in relation to each of the areas in which the Government made a proposal and the specific questions asked. Where the Government has concluded, in light of the consultation, that a significant change in the provisions is necessary, this is set out at the end of each section.
In summary the key Government changes include:
- Interspersion - Relaxation of the requirement for prescribed information to be shown as a whole and without interspersion.
- Transitional arrangements - In order to take account of industry concern that some of the required information for existing periodic fixed-sum statements was not currently available on their IT systems, the Government is allowing lenders to indicate where certain elements are not included in the actual statement, but will be available on request. In addition, the Government is removing the requirement that standards and notices cannot show information relating to the period before commencement of the transparency provisions in arrears statements.
- Estimated end of the agreement - The removal of the requirement in periodic fixed-sum statements to estimate a new end date for the agreement where payments had been missed or reduced. Instead, there is a requirement for a general warning on the effect of paying less than the agreed sum and what debtors should do in those circumstances.
- Implementation period for post-contract transparency provisions - The implementation period for post-contract transparency provisions has been extended by 6 months.
- High networth exemption - More flexible arrangements for the certification of an individual's high net worth status.
- Buy-to-let - The Government's policy intention of the CCA 2006 was that lending over £25,000 for the purpose of buy-to-let would fall within the business exemption. However current drafting in the CCA 2006 does not exempt buy-to-let for investment purposes. The DTI advises that it intends to address this before the Consumer Credit (Exemption Agreements) Order 2007 is brought before into force through a Legislative and Regulatory Reform Order to amend the Consumer Credit Act 1974.