The Consumer Credit (EU Directive) Regulations 2010

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations implement Directive 2008/48/EC of the European Parliament and of the Council on credit agreements for consumers (OJ No L133, 22.5.2008, p66) (“the Directive”) except for article 4, paragraphs 1 to 5 of article 5, article 10 and article 19.

Part 2 contains amendments to the Enterprise Act 2002 and to the Consumer Credit Act 1974 (“the Act”). Regulations 3 to 5 insert provisions into the Act which require a creditor to provide adequate explanations to debtors and to assess creditworthiness before entering into a regulated consumer credit agreement. Regulations 6 to 12 insert provisions concerning the giving of copies of agreements. Regulations 13 to 15 insert provisions dealing with the right to withdraw from regulated consumer credit agreements to which the right applies. Regulations 21 to 23 insert new provision dealing with current account overdrafts. Regulation 24 amends section 75 of the Act to ensure that the application of this section does not change following changes made by regulation 66 to the Consumer Credit (Exempt Agreements) Order 1989. Regulation 25 inserts a provision making a creditor secondarily liable where a debtor has a claim against a supplier of goods or services provided under a linked credit agreement. Regulations 26 to 28 insert provisions concerning the giving of certain information to debtors. Regulations 29 to 35 insert provisions giving debtors the right to settle their debts in part early and a right to a rebate when doing so. The provisions also give creditors the ability to claim compensation where early settlement occurs in full or in part. Regulation 36 inserts provisions requiring notice of assignment to be given to debtors. Regulations 37 to 39 insert provisions concerning the debtor’s right to terminate open-end agreements Regulation 40 inserts provisions to require creditors to disclose certain information to debtors where the creditor has consulted a credit reference agency. Regulations 41 to 43 insert provisions which place certain disclosure and other requirements on credit intermediaries. Regulation 46 amends the Enterprise Act 2002 to ensure that contraventions of laws implementing the Directive can be enforced under that Act as a Community infringement

Part 3 contains amendments to secondary legislation. Regulations 51 to 56 make amendments to regulations made under the Act relating to information to be included in consumer credit agreements outside scope of the regulations implementing the Directive. Regulation 58 amends regulations made under the Act requiring copies of documents to be sent to debtors. Regulations 59 to 62 and 77 to 84 make amendments to regulations made under the Act relating to early settlement of debts. Regulations 64 to 67 and 92 amend Orders made under the Act which exempt certain credit agreements to ensure that credit agreements which fall within the scope of the Directive are covered by the Act. Regulations 73 to 76 amends regulations made under the Act relating to information to be disclosed before an agreement is made in respect of agreement outside the scope of regulations implementing the Directive. Regulations 85 to 89 amend regulations applying to distance marketing of financial services to limit their application in respect of consumer credit agreements which are also distance contracts.

Part 4 contains commencement, transitional and saving provision. Regulation 99 provides that most of the provisions of the Regulations come into force on 1st February 2011. Regulation 101 provides that the Regulations apply only to agreements entered into on or after 1st February 2011. It also provides that some of the regulations apply from 1st February 2011 to certain categories of agreement entered into before that date. Regulation 101 provides that Parts 1 to 3 of the Regulations may apply before 1st February 2011 in relation to a prospective consumer credit agreement and any subsequent agreement where certain conditions are satisfied

A transposition note and an impact assessment of the effect of this instrument will have on the costs to business and the voluntary sector are available from the BIS website (www.bis.gov.uk). They are also annexed to the Explanatory Memorandum which is available alongside the instrument on the OPSI website (www.opsi.gov.uk). Copies have also been placed in the Libraries of both Houses of Parliament.