Consumer Credit Act 1974

Before 1974, consumer credit law had developed in a piece meal way, largely as a response to advances in retail practices. Numerous different Acts were involved in enforcing the law which dealt with the type of lender, rather than dealing with credit as a whole.

In 1968 the Crowther Committee was appointed to review the whole legal framework of credit granting and security. Its remit was to review all aspects of credit control and make recommendations for change.

The Committee recommended sweeping changes with the main principles to be:  

• The redress of bargaining equality  
• The control of trading malpractice   
• The regulation of default remedies

The Crowther Committee’s report led to the Consumer Credit Act 1974 (CCA 74). It afforded the consumer greater protection while embodying the American principle of ‘truth and openness in lending’ throughout the Act.

The Act was amended by the Consumer Credit Act 2006 which came into force on the 30 March 2006. The changes were phased in over a two year period and have now been implemented.

It also amended the Consumer Credit Act 1974; to extend the ombudsman scheme under the Financial Services and Markets Act 2000 to cover licensees under the Consumer Credit Act 1974; and for connected purposes.

The Act deals with all regulated credit agreements financial limits were removed on 1st April 2008.

Further changes to consumer credit regulations:

After the tremendous task of implementing the changes which flowed from the 2006 Act there came further changes from the direction of the European Community.

The Consumer Credit Directive

From the 1st February 2011 any lenders providing unsecured loans which are regulated by the Consumer Credit Act 1974 will have to comply with new guidelines imposed by the Consumer Credit (EU Directive) Regulations 2010. The new directive makes a number of changes to the CCA 74 in an attempt to make lending fairer while giving borrowers greater rights. 

The rules have been in force on a voluntary basis since April 2010 but on the 1st February they became compulsory.

Loans on or after the 1st February will have to comply with the new regulations provided that they meet the criteria. To view guidance on the directive which also gives a summary of the changes click here.

The Consumer Credit Act 1974 is a UK Act and therefore falls under the auspices of the Westminster Parliament.

Present

On 1st April 2014, the Financial Conduct Authority (FCA) took over the regulation of consumer credit firms, which were previously regulated by the Office of Fair Trading