The Consumer Credit (Content of Quotations) and Consumer Credit (Advertisements) (Amendment) Regulations 1999

Explanatory Note

(This note is not part of the Regulations)

Part II of these Regulations provides for the inclusion of prescribed information in quotations. A quotation is defined (subject to exceptions) as any document by which a person gives a prospective customer information about the terms on which he is prepared to do business (regulation 2(1)). Part III of these Regulations amends the Consumer Credit (Advertisements) Regulations 1989 (“the 1989 Regulations”).

Part II requires that when a person who carries on a consumer credit business, a consumer hire business or a business which involves providing credit to individuals secured on land provides a quotation to a prospective customer in connection with a prospective credit agreement which will or may be secured by a mortgage or charge (or in Scotland by a standard security) on the customer’s home, that quotation must include a statement that such security is or may be required and, in addition, the warning “Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it” (regulation 3).

The same requirements apply to quotations provided in connection with a prospective hire agreement which will or may be similarly secured on the customer’s home, except that the required warning statement is “Your home is at risk if you do not keep up payments on a hire agreement secured by a mortgage or other security on your home” (regulation 5).

Where the prospective credit agreement is one which will be secured by mortgage, charge or standard security on land and require repayments to be made in a currency other than sterling, the Regulations require a quotation to include the warning “The sterling equivalent of your liability under a foreign currency mortgage may be increased by exchange rate movements” (regulation 4).

Part II contains the same requirements where the quotation is provided by a credit-broker and relates to a credit or hire agreement between an individual and a person to whom the credit-broker effects introductions (regulation 6).

By virtue of the definition in regulation 2(1) of “the specified form”, the prescribed warnings are to be in capital letters and must be clear, legible and prominent.

A person who is required to include prescribed information in a quotation in the specified form but fails to do so, or fails to cause it to be included, commits an offence under section 167(2) of the Consumer Credit Act 1974.

Part III of these Regulations amends the 1989 Regulations. The amendments have the effect of exempting certain credit advertisements from the requirement to contain one or both of the warning statements “Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it” and “The sterling equivalent of your liability under a foreign currency mortgage may be increased by exchange rate movements”. The exemption applies to television and radio advertisements broadcast in the course of programming whose primary purpose is not advertising, and to advertisements on film.

The amendments to the 1989 Regulations also have the effect of exempting the same types of hire advertisements from the requirement to contain the statement “Your home is at risk if you do not keep up payments on a hire agreement secured by a mortgage or other security on your home”.

A Regulatory Impact Assessment of the costs and benefits which will result from these Regulations has been prepared. Copies have been placed in the libraries of both Houses of Parliament and can also be obtained from the Consumer Affairs Directorate of the Department of Trade and Industry, Room 407, 1 Victoria Street, London SW1H 0ET.