The Consumer Credit Directive: are you ready?

Updated January 2011

The Consumer Credit Directive (CCD) implementation deadline of 1 February 2011 is imminent.

Many of our clients have been immersed in CCD implementation projects to ensure that all the necessary changes are in place to meet this deadline. A particular focus has been lending practices previously exempt from the Consumer Credit Act (CCA).

By way of a quick reminder, the CCD was introduced to offer borrowers a 'fairer' deal. The UK implementing regulations are made up of six statutory instruments to be incorporated into the CCA, making an already complicated Act more complex.

It is a pity that the Government has not used this opportunity to take the bull by the horns, and produce a much needed redraft of our existing CCA regime.

Certain requirements introduced under the CCD, such as the requirement for a SECCI form, have already been put into practice, with the majority of the remaining requirements to be adopted by lenders by 1 February.

Some of the key requirements to be considered for 1 February include:

• Allowing borrowers to withdraw without reason within 14 days of entering into a credit agreement;
• Assessing creditworthiness based on sufficient information from the borrower;
• Giving borrowers adequate explanations of all parts of the credit agreement before the agreement is signed;
• Disclosing fees and links to lenders by credit intermediaries.

It is also worth noting that the UK Department for Business, Innovation and Skills has decided to extend the scope of the UK implementing regulations to business lending currently exempt from the CCA.

If you think that the changes may affect your business and would like us to assist you in ensuring the necessary amendments to your lending practices are made, or if you feel that it is time for a health check of your loan documentation, please contact Suzanne MacDonald, Partner and Head of our Financial Services Regulation team.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 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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