The Consumer Credit Exempt Agreements Order of 1989 was recently amended, and it is important for both lenders and borrowers to understand the changes in order to stay compliant with the law.
Before delving into the amendments, let’s first discuss what the Consumer Credit Exempt Agreements Order of 1989 is. This order exempts certain types of credit agreements from regulation under the Consumer Credit Act of 1974. The exempt agreements include agreements for a credit limit of £25,000 or more, agreements for credit which is secured on land, and agreements for hire-purchase or conditional sale of motor vehicles.
The recent amendments to the order have been made to ensure that the order remains relevant and effective in today’s market. One of the key changes is the introduction of new exemptions for certain types of lending. This includes lending to small and medium-sized enterprises (SMEs) and lending to high-net-worth individuals. The exemptions allow lenders to provide credit to these groups without being subject to the provisions of the Consumer Credit Act.
Another significant change is the increase in the credit limit for regulated agreements. The limit has been raised from £25,000 to £60,260, allowing more agreements to be exempt from regulation. This change is particularly important for agreements relating to motor vehicles, as many modern cars now exceed the previous limit of £25,000.
The amendments also introduce new requirements for lenders, such as the need to provide a concise statement of the borrowing costs and interest rates associated with the loan. This will help borrowers to understand the costs associated with the credit agreement and make informed decisions.
It is important for lenders to be aware of the changes and ensure that their lending practices are compliant with the amended order. Failure to comply can result in legal consequences, including fines or imprisonment.
Overall, the amendments to the Consumer Credit Exempt Agreements Order of 1989 are designed to ensure that the legislation remains relevant and effective in today’s market. By staying up-to-date with the changes, lenders can continue to provide credit to borrowers while maintaining compliance with the law.