Keenan and Riches’BUSINESS LAW

Chapter 13Credit

and his employees, and the practices and procedures

that will be implemented by the business. Matters which

the OFT should take into account include whether the

applicant or an associate:

(i) has committed an offence involving fraud, dishon-

esty or violence;

(ii) has contravened provisions of relevant legislation,

e.g. the 1974 Act;

(iii) has practised discrimination;

(iv) has engaged in business practices which appear to

the OFT to be deceitful, unfair or improper, which

may include irresponsible lending.

The OFT must publish guidance on the way it deter-

mines the fitness of a person to hold a licence.

Anyone who carries on any of the activities listed

above without a licence commits a criminal offence.

Moreover, an agreement made by an unlicensed trader

is enforceable only at the discretion of the OFT.

The OFT has the power to vary, suspend and revoke

licences and to issue indefinite licences. It also acquires

powers to impose requirements on existing and new

licensees where it is dissatisfied with the conduct of the

business.

The OFT may require applicants for a licence to

provide additional information and a duty is imposed

on applicants to inform it of any changes in the infor-

mation supplied within 28 days. The OFT can enter the

licensee’s premises on reasonable notice to observe how

the business is being carried on or to inspect relevant

documents; it can obtain a warrant to enter premises.

The OFT has the power to impose a civil penalty of up

to £50,000 on ‘defaulters’ for every breach of an OFT

requirement. It must publish a statement of policy in

regard to the exercise of its powers in relation to civil

penalties.

A Consumer Credit Appeals Tribunal has been estab-

lished to deal with appeals from decisions of the OFT.

There will be a right of appeal to the Court of Appeal

and from there to the House of Lords. The jurisdiction

of the Financial Services Ombudsman is extended to

cover consumer credit licensees.

Seeking business

The Act controls three ways of attracting business:

advertising, giving quotations and canvassing.

391

payments in excess of £25,000, and the agreement is
wholly or predominantly for business purposes.

(c)‘Buy to let’ agreements – the lending must be secured
by a mortgage and less than 40% of the property is to be
used as a dwelling by the debtor, their spouse or a close
relative.

General provisions with wider application

Some parts of the Act apply to otherwise exempt agree-
ments. For example, the safeguards on extortionate credit
affect all credit irrespective of the amount, and from
1 September 1985 the regulations concerning advertise-
ments and quotations only apply to all institutions
engaged in house mortgage lending.

Licensing of credit and hire

businesses

The Act set up a comprehensive licensing system to con-
trol the activities of those in the credit and hire business.
The following categories of business require a consumer
credit licence:

1 consumer credit business, e.g. banks, moneylenders,
finance companies;
2 consumer hire business, e.g. TV and car rental
companies;
3 credit brokerage, e.g. car dealers, estate agents;
4 debt adjusting;
5 non-commercial debt adjusting;
6 debt counselling;
7 non-commercial debt counselling;
8 debt collecting;
9 debt administration (from October 2008);
10 provision of credit information services – including
credit repair (from October 2008);
11 provision of credit information services – excluding
credit repair (from October 2008);
12 provision of non-commercial credit information
services – including non-commercial credit repair;
13 credit reference agencies.

The Act also applies to brokers who, for example, arrange
credit for their customers with a finance company.
The OFT is charged with determining the fitness of
applicants to hold a licence and to have regard to the
skills, knowledge and experience of the licence holder