Credit transactions 425(iii) An agreement can be a regulated agreement no matter how much credit is provided.
However, if credit of more than £25,000 is given to an individual for business purposes
then the agreement will be an exempt agreement. As regards agreements made before
6 April 2008 an agreement will not be a regulated agreement if credit of over £25,000
was given to anyone.
(iv) To qualify as a consumer hire agreement the agreement must be capableof running for
more than three months. However, there is no minimum time for which the agreement
must actually run.
(v) Hire-purchase agreements are not consumer hire agreements because they are con-
sumer credit agreements.
(vi) Exempt agreements include the following types of agreements:
(a) Mortgages given on land, provided that they are given by a local authority or by a
non-profit making organisation, such as a building society rather than a bank.
(b) Some low-interest agreements if they are offered to a limited class of people, such
as employees, rather than to the general public.
(c) Some agreements, other than conditional sale or hire-purchase agreements, where
all the payments must be made within 12 months of the date of the agreement and
the number of payments is four or fewer.
(d) Purchases made on a credit card which require the debtor to settle the account in
full with one payment within a certain time. A purchase with an American Express
credit card would therefore be exempt, as this is the way that American Express
cards operate. However, a purchase made with an Access card or a Barclaycard
would not be an exempt agreement because the holders of Access cards and
Barclaycards do not have an obligation to settle the account with one payment
within a given period.High net worth debtors and business exemptions
As regards agreements created after 6 April 2008, agreements made by high net worth
debtors and agreements relating to businesses can be exempted from all of the provisions
of the Act, except those relating to unfair relationships between creditors and debtors.
Section 16A(1) provides that, as regards agreements created after 6 April 2008, a consumer
credit agreement or a consumer hire agreement will not be regulated by the Act where:
(i) the debtor is a natural person (not a partnership or company);
(ii) the agreement includes a declaration made by him to the effect that he agrees to forgo
the protection and remedies that would be available under the Act if the agreement
were a regulated agreement;
(iii) a statement of high net worth has been made in relation to him; and
(iv) that statement is current in relation to the agreement and a copy of it was sent to the
creditor or owner before the agreement was made.
The statement of high net worth cannot be made by the person to whom it relates. It must
be made by the creditor or an accountant. A statement of high net worth will state that, in
the opinion of the person making it, the natural person in relation to whom it is made either:
n had income totaling £150,000 in the previous financial year; or
n throughout the previous financial year had net assets of a specified description with a
total value of not less than £500,000.