The Consumer Credit (Agreements) Regulations 2010

Made: 28th March 2010

Laid before Parliament: 30th March 2010

Coming into force in accordance with regulation 1(2)

The Secretary of State makes these Regulations in exercise of the powers conferred by sections 60, 61(1)(a), 105(9), 114(1), 182(2) and 189(1) of the Consumer Credit Act 1974.

Citation, commencement and interpretation

1

• (1) These Regulations may be cited as the Consumer Credit (Agreements) Regulations 2010.

• (2) Except as provided for in paragraphs (2A) and (2B) these Regulations shall come into force —

• (a) on 1st February 2011, or

• (b) in relation to a regulated consumer credit agreement, on the date and at the time Parts 1 to 3 of the Consumer Credit (EU Directive) Regulations 2010 apply to such an agreement, being a date before 1st February 2011.

• (2A) Where the condition in paragraph (2B) is satisfied on a date on or after 26th August 2010 and before 1st February 2011 in relation to a prospective regulated consumer credit agreement to which section 58 of the Act applies, these Regulations apply to that agreement (and to any subsequent regulated consumer credit agreement entered into before 1st February 2011) from the date and time the condition is satisfied.

• (2B) The condition referred to in paragraph (2A) is that—

• (a) before the creditor gives the debtor the unexecuted agreement for his signature the creditor gives the debtor a copy of the unexecuted agreement in compliance or purported compliance with regulations 3 and 7 of, and Schedules 1 and 2 to, these Regulations and

• (b) the copy of the unexecuted agreement contains a heading and notice as set out in regulation 4(a)(ii) and (b)(ii) respectively of the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983.

• (3) In these Regulations, unless the context otherwise requires—

• “the Act” means the Consumer Credit Act 1974;

• “advance payment” includes any deposit and in relation to a regulated consumer credit agreement includes also any part-exchange allowance in respect of any goods agreed in antecedent negotiations to be taken by the creditor in part-exchange but does not include a repayment of credit or any insurance premium or any amount entering into the total charge for credit;

• “the APR” means the annual percentage rate of charge for credit determined in accordance with Schedule 4 and the total charge for credit rules;

• “cash price” in relation to any goods, services, land or other things means the price or charge at which the goods, services, land or other things may be purchased by, or supplied to, the debtor for cash;

• “contract of shortfall insurance” means anything in writing which contains or purports to contain some promise or assurance (however worded or presented) that if a sum payable under a contract of insurance against loss of or damage to goods is less than the amount necessary to defray—any amount of credit provided to finance the purchase of those goods, andany other amount included in the total charge for that credit,to the extent that these remain unpaid at the date of the loss or damage, a sum up to but not exceeding that shortfall will be paid;

• “credit intermediary” has the same meaning as in section 61A of the Act;

• “distance contract” means any regulated agreement made under an organised distance sales or service provision scheme run by or on behalf of the creditor who, in any such case, for the purpose of the agreement makes exclusive use of one or more means of distance communication up to and including the time at which the agreement is made. For this purpose, “means of distance communication” means any means which, without the simultaneous physical presence of the creditor or a person acting on behalf of the creditor, and of the debtor, may be used for the making of a regulated agreement between the parties to that agreement;

• “earlier agreement” means an earlier consumer credit agreement for the provision of credit;

• “exempted agreement” means an agreement of the description specified in the Schedule to the Consumer Credit (Notices of Cancellation Rights) (Exemptions) Regulations 1983 in relation to which there are no charges forming part of the total charge for credit;

• “the Information Regulations 2010” means the Consumer Credit (Disclosure of Information) Regulations 2010 ;

• “lettering” includes figures and symbols;

• “modified agreement” means an earlier agreement as varied or supplemented by a modifying agreement, which is treated as—revoking the earlier agreement, andcontaining provisions reproducing the combined effect of the two agreements;

• “pawn agreement” means a regulated consumer credit agreement under which the creditor takes an article in pawn;

• “pre-contract credit information” means the information required to be disclosed by regulation 3(4) of the Information Regulations 2010;

• “total amount of credit” means the credit limit or the total sums made available under a consumer credit agreement;

• “total amount payable” means the sum of the total charge for credit and the total amount of credit payable under the consumer credit agreement as well as any advance payment;

• “total charge for credit” means the total charge for credit determined in accordance with Schedule 4 and the total charge for credit rules;

• “the total charge for credit rules” means rules made by the Financial Conduct Authority under article 60M of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 for the purposes of Chapter 14A of Part 2 of that Order;

• (4) References in these Regulations to a contract of insurance shall be read with—

• (a) section 22 of the Financial Services and Markets Act 2000 ,

• (b) any relevant order under that section, and

• (c) Schedule 2 to that Act.

• (5) In these Regulations—

• (a) a reference to a repayment is a reference to—

• (i) a repayment of the whole or any part of the credit,

• (ii) a payment of the whole or any part of the total charge for credit, or

• (iii) a combination of such repayments and payments.

• (b) a reference to rate of interest is a reference to the interest rate expressed as a fixed or variable percentage applied on an annual basis to the amount of credit drawn down.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Agreements to which these regulations apply

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• (1) These Regulations apply in respect of a regulated consumer credit agreement except as provided for in paragraphs (1A) to (5).

• (1A) These Regulations apply to an agreement to which section 58 of the Act applies where—

• (a) before the creditor gives the debtor the unexecuted agreement for his signature the creditor gives the debtor a copy of the unexecuted agreement in compliance or purported compliance with regulations 3 and 7 of, and Schedules 1 and 2 to, these Regulations, and

• (b) the copy of the unexecuted agreement contains a heading and notice as set out in regulation 4(a)(ii) and (b)(ii) respectively of the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983.

• (2) These Regulations do not apply to an agreement mentioned in paragraph (3) unless pre-contract credit information has been disclosed in compliance (or in purported compliance) with the Information Regulations 2010.

• (3) The agreements referred to in paragraph (2) are—

• (a) an agreement secured on land other than an agreement to which section 58 applies;

• (b) an agreement under which the creditor provides the debtor with credit which exceeds £60,260 other than a residential renovation agreement;

• (c) 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.

• (4) Paragraph (2) and regulations 3 to 4 and 6 to 7 do not apply to an authorised non-business overdraft agreement or an authorised business overdraft agreement.

• (5) Regulation 5 does not apply to a regulated consumer credit agreement which is also a distance contract unless the agreement is entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.

• (6) Article 60C(5) and (6) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 applies for the purposes of paragraphs (3)(c) and (5).

Form and content of regulated consumer credit agreements

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• (1) Documents embodying a regulated consumer credit agreement shall contain the information set out in column 2 of Schedule 1 to these Regulations in so far as that information relates to the type of agreement referred to in column 1.

• (2) The information specified in Schedule 1 shall be presented in a clear and concise manner.

• (3) For the purposes of this regulation, the requirement for the information to be “clear” includes a requirement that the wording, apart from any signature, is to be easily legible and of a colour which is readily distinguishable from the background medium upon which the information is displayed.

• (4) Documents embodying a regulated consumer credit agreement, other than an exempted agreement, shall contain statements of the protection and remedies available to debtors under the Act, in the Form numbered in column 1 of Schedule 2 to these Regulations and set out in column 3, in so far as those statements relate to the type of agreement referred to in column 2.

• (5) Documents embodying a regulated consumer credit agreement shall contain details of any security provided in relation to the regulated agreement by the debtor.

• (6) Paragraph (7) applies to documents embodying a debtor-creditor-supplier agreement falling within section 12(a) of the Act or a debtor-creditor agreement (in this paragraph and paragraph (7) referred to as “the principal agreement”) and also embodying, or containing the option of, a debtor-creditor-supplier agreement falling within section 12(b) of the Act (in this paragraph referred to as “the subsidiary agreement”) where the subsidiary agreement is to finance a premium under one or more of—

• (a) a contract of insurance to provide a sum payable in the event of the death of a debtor or a debtor suffering one or more of the following—

• (i) accident;

• (ii) sickness;

• (iii) unemployment,

at any time before the credit under the principal agreement and the subsidiary agreement has been repaid, where

• (i) the sum payable does not exceed the amount sufficient to defray the sums payable to the creditor in respect of that credit and of the total charge for credit, and

• (ii) the policy monies payable under the contract of insurance are to be used for a repayment under the principal agreement and the subsidiary agreement;

• (b) a contract of shortfall insurance;

• (c) a contract of insurance in so far as it relates to the guarantee of goods.

• (7) Documents to which this regulation applies may contain instead of the headings specified in paragraph 1 of Schedule 1 to these Regulations and any applicable statements of protection and remedies available to debtors under the Act that would otherwise apply—

• (a) a heading in so far as it relates to the principal agreement, and

• (b) if applicable, statements of the protection and remedies available to debtors under the Act in so far as they relate to the principal agreement.

Signing of agreement

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• (1) The information specified in paragraphs 5, 6, 7, 11 and 14 of Schedule 1 to these Regulations in relation to the type of regulated consumer credit agreement referred to in column 1 shall be “the prescribed terms” for the purposes of section 61(1)(a) of the Act (the terms which must be contained in a document if a regulated consumer credit agreement is not to be improperly executed).

• (2) The document containing the prescribed terms of the regulated consumer credit agreement referred to in paragraph (1) shall contain a space indicated for the purpose of the debtor's signature.

• (3) The signature of the document shall be made in the following manner—

• (a) by the debtor, or by or on behalf of the debtor in the case of a partnership or an unincorporated body of persons, in the space in the document indicated for the purpose and, subject to sub-paragraph (c), the date of the signature shall be inserted in the space in the document indicated for the purpose,

• (b) by the creditor, or by a person on behalf of the creditor, and subject to sub-paragraph (c), the date of the signature shall be inserted in the document,

• (c) except where the agreement is cancellable, the date on which the unexecuted agreement becomes an executed agreement may be inserted in the document and in such a case any other date specified in paragraphs (a) and (b) need not be inserted, and

• (d) nothing in this regulation shall prohibit the inclusion in the said document, near to any such signature, of the signature by any witness.

• (4) In Scotland any provision in paragraph (3) requiring the said document to be signed shall be complied with by a body corporate if the document is properly executed in accordance with the law of Scotland.

• (5) Where an agreement is intended to be concluded by the use of electronic communication nothing in this regulation shall prohibit the inclusion in the document of information about the process or means of providing, communicating or verifying the signature to be made by the debtor.

Modifying agreements

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• (1) These Regulations shall apply to a modifying agreement which varies or supplements an earlier agreement and which is, or is treated under section 82(3) of the Act as, a regulated agreement.

• (2) Where an item of information required by regulation 3(1) or 8(1) is unchanged by the modifying agreement, the requirements of regulation 3(1) or 8(1) may be satisfied in relation to such item of information by a statement in the modifying agreement clearly indicating that the information in the earlier agreement remains unchanged.

• (3) Except as provided for in paragraph (3A) a statement referred to in paragraph (2) shall be contained in the document which is signed by the debtor.

• (3A) Where a modifying agreement is an authorised business overdraft agreement or an authorised non-business overdraft agreement the document referred to in paragraph (3) does not have to be signed by the debtor.

• (4) The information referred to in regulation 4(1) as prescribed terms for the purposes of section 61(1)(a) of the Act shall not be prescribed for the purposes of a modifying agreement if the information contained in the earlier agreement has not been varied or supplemented by the modifying agreement.

• (5) For the purposes of Schedule 1 to these Regulations, in calculating—

• (a) the amount of repayments of credit or of any capital outstanding under an earlier agreement,

• (b) the total charge for credit (or any items included in it) in relation to the credit to be provided under the modified agreement, or

• (c) the APR in relation to the modified agreement,

the relevant date shall be determined by reference to the date of the modifying agreement.

Pawn agreements

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Where a pawn-receipt is given under section 114(1) of the Act by a person who takes any article in pawn under a regulated consumer credit agreement (or a modifying agreement varying or supplementing an earlier credit agreement which is, or is treated under section 82(3) of the Act as, a regulated consumer credit agreement) and where the pawn-receipt is not separate from any document embodying such an agreement, it shall contain—

• (a) the information set out in paragraphs 1, 2 and 22 of Schedule 1 to these Regulations, and

• (b) a notice in the form contained in Schedule 3 to these Regulations.

Statutory Forms

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• (1) The wording of any Form specified in Schedules 2 and 3 to these Regulations shall be reproduced in documents embodying regulated consumer credit agreements where applicable without any alteration, except that—

• (a) the words “the creditor” may be replaced by the name of the creditor, by the expression by which the creditor is referred to in the agreement or by an appropriate pronoun, and any consequential changes to pronouns and verbs or other consequential grammatical changes may be made,

• (b) the word “DEBTOR” may be replaced by “ BORROWER ” or “ CUSTOMER ” and the word “Debtor(s)” may be replaced by “ Borrower(s) ” or “ Customer(s) ”, and

• (c) every Form shall be completed in accordance with any note.

• (2) Any such note shall not be treated as part of any Form specified in the said Schedules and may be reproduced in addition to any such Form.

• (3) Where any such note requires any words to be omitted, those words shall be omitted or deleted.

• (4) Where words are shown in capital letters in any Form specified in Schedule 2 or 3 to these Regulations, and are reproduced in documents embodying regulated consumer credit agreements, they shall be afforded more prominence (whether by capital letters, underlining, larger or bold print or otherwise) than any other lettering in that Form except lettering inserted in accordance with paragraph 1(c) and no less prominence than that given to any other information in the document apart from the heading to the document, trade names, names of parties to the agreement or lettering in the document inserted in handwriting.

Form and content of an authorised overdraft agreement

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• (1) Subject to paragraph (3), in the case of an authorised non-business overdraft agreement or an authorised business overdraft agreement, the following information shall be specified in writing in a clear and concise manner—

• (a) the type of credit,

• (b) the identities and geographical addresses of the creditor, debtor and, where relevant, of any credit intermediary involved,

• (c) the duration of the agreement,

• (d) the credit limit and the conditions governing its drawdown,