The Consumer Credit (Agreements) (Amendment) Regulations 2004

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Consumer Credit (Agreements) Regulations 1983 (“the 1983 Regulations”) with effect from the 31st May 2005 subject to a transitional provision in regulation 18. The principal amendments made by the Regulations are as follows—

(1) they substitute a new paragraph (4) in each of regulations 2, 3 and 7 of the 1983 Regulations. The new paragraphs (4) set out the order in which the prescribed content of documents embodying a regulated consumer credit agreement, a regulated consumer hire agreement and a modifying agreement treated as a regulated agreement under section 82(3) of the Act is to be given and the place of the signature and separate boxes required under the Regulations;

(2) they amend regulation 2(7) by providing for an additional form of consent to be signed by a debtor in specified circumstances where the debtor is purchasing certain insurance products on credit;

(3) they substitute regulation 2(8) and (9) for regulation 2(7A) of the 1983 Regulations which provides that documents embodying certain consumer credit agreements (the principal agreements) and embodying, or containing the option of, certain agreements (the subsidiary agreements) relating to contracts of insurance against accident, sickness, unemployment or death or any contract relating to a guarantee of goods may contain with one minor exception only the information, statements and signature boxes relating to the principal agreement. The new provision extends the meaning of “subsidiary agreements” to cover contracts of shortfall insurance as now defined in regulation 1(2);

(4) they strengthen the legibility and prominence requirements in regulation 6(2) of the 1983 Regulations;

(5) they amend Schedule 7 to the 1983 Regulations by providing for the use of particular assumptions in calculating the APR and the Total Charge for Credit to be stated in running-account credit agreements;

(6) they amend Schedules 1, 3 and 8 by requiring certain additional information to be included in an agreement; and

(7) they amend Schedules 2 and 4 by simplifying the language used.

A full regulatory impact assessment of the effect that this instrument will have on costs to business is available from the Consumer and Competition Policy Directorate of the Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET.