New CCA now in force

[EXC]

http://www.oft.gov.uk/news/press/2008/45-08

[Amethyst]

Re: New CCA now in force

OFT welcomes major changes to consumer credit licensing regime

45/08 6 April 2008
The OFT today welcomes the introduction of significant changes to the consumer credit regime. The reforms introduced by the Consumer Credit Act 2006 (CCA06) come into force today and will allow the OFT to operate a more focused and flexible regime to protect consumers.

The changes allow the OFT to focus its resources on businesses engaged in credit activities which, by their nature, pose a high risk to consumers, and to adopt a more flexible approach to regulation than the previous one-size-fits-all system allowed. The reforms give the OFT a wider range of enforcement powers and sanctions to help bring about improvement in a licensee's conduct when it causes concern. At present the OFT can only refuse or revoke a credit licence.

Changes to the regime include:

• indefinite standard licences become the norm for most licences holders
• the fitness test being extended to give the OFT the power to assess whether a business has the necessary competence to provide consumer credit products and services. This enables the OFT to take account of likely future behaviour as well as any past misconduct
• identifying irresponsible lending as an unfair business practice
• introducing powers for the OFT to impose requirements on licensees where it is dissatisfied with any aspect of their business
• the OFT given the ability to impose financial penalties of up to £50,000 where a requirement has not been complied with, and
• the OFT given enhanced information gathering powers.

OFT Chief Executive John Fingleton said:

'The new provisions will allow us to adopt a more targeted approach to credit licensing based on risk to consumers. In practice this means we will be able to deal more effectively with behaviour harming consumers while minimising the burdens we impose on businesses that treat consumers well. All in all this will improve business standards to the benefit of consumers.'

NOTES

1. The Consumer Credit Act 1974 (the Act) requires businesses that offer goods or services on credit or lend money or are involved in activities relating to credit or hire to be licensed by the OFT. The changes which come into force today are some of the most significant to the consumer credit regime operated by the OFT since the licensing system was introduced.
2. The OFT can refuse or revoke a licence if it decides that a trader is not fit to hold such a licence.
3. There are approximately 120,000 consumer credit licences holders in the UK.