Are you still exempt from the CCA?

Updated June 2011

As many of you will already be aware, the UK Consumer Credit regime underwent significant change earlier this year to implement the EC Consumer Credit Directive. The changes affecting the exemptions from the Consumer Credit Act are now fully implemented. In practice this means that fewer agreements will now be exempt from the requirements of the CCA.

The main exemptions that have been affected in this way include:

• High net worth – This exemption, which relates to high net worth individuals, now only applies to agreements over £60,260.
• Number of payments – Previously, if the total number of payments under an agreement did not exceed four and the payments were required to be made within a period not exceeding 12 months, this exemption may have applied. However, it is now only available where the credit is free of interest and other charges.
• Rate of total charge for credit – The conditions previously applying to this exemption (credit only offered to a particular class of individuals; interest is 1% above the base rate of certain banks) still apply. There are, however, a number of additional conditions that must now be satisfied in order to utilise this exemption.

It is worth bearing in mind that if agreements are secured on land, these changes will not apply.

If your business relies on any of the above exemptions, we recommend a full review to assess the impact of these changes on your lending practices and to ensure that your agreements are not now subject to CCA regulation.

For more information, please contact Suzanne MacDonald, who heads up our Financial Services Regulation team.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2011. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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