The Consumer Credit (Amendment) Regulations 2011

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations, issued free of charge, amend the Consumer Credit (EU Directive) Regulations 2010 (S.I. 2010/1010), the Consumer Credit (Total Charge for Credit) Regulations 2010 (S.I. 2010/1011) and the Consumer Credit (Disclosure of Information) Regulation 2010 (S.I. 2010/1013) (“the principal Regulations”) to correct drafting errors. The principal Regulations implement Directive 2008/48/EC of the European Parliament and of the Council on credit agreements for consumers (OJ No L133, 22.5.2000, p66) (“the Directive”) except for articles 4 and 10.

Regulations 2 to 6 amend S.I. 2010/1010 to correct errors in the amendments made to primary and secondary legislation by those Regulations. Regulation 3 clarifies the amount a creditor may claim in compensation for early repayment by the debtor. The creditor can charge the relevant percentage, as defined in section 95A of the Consumer Credit Act 1974, so long as that amount does not exceed the total amount of interest that would have been paid by the debtor under the agreement if the debtor had not repaid early. Regulation 4 amends Forms 14, 15 and 16 of Schedule 2 to the Consumer Credit (Agreements) Regulations 1983 to clarify that the notice of full early repayment does not need to be given in writing unless the agreement is secured on land. This is a minor amendment but the text of the Forms have been substituted for ease of use. Regulation 6 clarifies when the cancellation period starts to run for authorised non-business overdraft agreements under the Financial Services (Distance Marketing) Regulations 2004.

Regulation 7 amends S.I. 2010/1011 and regulation 8 amends S.I. 2010/1013 to correct drafting errors in those Regulations.

Regulations 9 to 11 make transitional provision to provide a grace period for creditors who have prepared forms prior to regulation 4 coming into force so that those forms may be used during that period and will be treated as complying with the relevant provisions of the Consumer Credit Act 1974 and associated Regulations.

An impact assessment has not been prepared for these Regulations since they have the same effect on the costs to business and the voluntary sector as the principal Regulations. A copy of the transposition note and impact assessment for the principal Regulations is available from the BIS website (www.bis.gov.uk) and was placed in the Libraries of both Houses of Parliament.