Consumer Credit Bill

House of Commons

Session 2004 - 05
Internet Publications
Other Bills before Parliament

Consumer Credit Bill

Consumer Credit Bill
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(9)
In paragraph 15(3) of Schedule 3 to that Act (EEA passport rights) for “21, 39(1)
and 147(1)” substitute “21 and 39(1)”.
(10)
In paragraph 23 of that Schedule in sub-paragraph (1) for “Sub-paragraph (2)
applies” substitute “Sub-paragraphs (2) and (2A) apply”.
(11)
In sub-paragraph (2) of that paragraph for “(a) to (d) of section 25(2)” substitute
5
“(a) to (e) of section 25(2A)”.
(12)
After that sub-paragraph insert—
   “(2A)
The Authority may also exercise its power under section 45 in respect
of the firm if the Office of Fair Trading has informed the Authority
that it has concerns about any of the following—
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(a)
the firm’s skills, knowledge and experience in relation to
Consumer Credit Act businesses;
(b)
such skills, knowledge and experience of other persons who
are participating in any Consumer Credit Act business being
carried on by the firm;
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(c)
practices and procedures that the firm is implementing in
connection with any such business.”
Duration of licences
34
Definite and indefinite licences
(1)
In subsection (1) of section 22 of the 1974 Act (definitions of standard and
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group licences)—
(a)
in paragraph (a) for “during the prescribed period” substitute “whilst it
is in effect”;
(b)
in paragraph (b) for the words from “during” to “indefinitely”
substitute “whilst it is in effect”.
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(2)
After that subsection insert—
“(1A)
The terms of a licence shall specify—
(a)
whether it has effect indefinitely or only for a limited period;
and
(b)
if it has effect for a limited period, that period.
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(1B)
For the purposes of subsection (1A)(b) the period specified shall be
such period not exceeding the prescribed period as the OFT thinks fit.
(1C)
A standard licence shall have effect indefinitely unless—
(a)
the application for its issue requests that it have effect for a
limited period only; or
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(b)
the OFT otherwise thinks there is good reason why it should
have effect for such a period only.
(1D)
A group licence shall have effect for a limited period only unless the
OFT thinks there is good reason why it should have effect indefinitely.”
(3)
In section 29 of that Act (renewal of licences)—
40
(a)
in subsection (1) after “standard licence” insert “of limited duration”;
(b)
in subsection (4) for “in force” substitute “to have effect”.

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(4)
In subsection (1) of section 31 of that Act (compulsory variation of licences)
after “that time” insert “(assuming, in the case of a licence which has effect
indefinitely, that it were a licence of limited duration)”.
(5)
Before subsection (2) of that section insert—
“(1B)
The OFT shall also proceed as follows if, having regard to section 22(1B)
5
to (1D), it is of the opinion—
(a)
that a licence which has effect indefinitely should have its
duration limited; or
(b)
in the case of a licence of limited duration, that the period
during which it has effect should be shortened.”
10
(6)
In section 32(1) of that Act (suspension and revocation of licences) after “that
time” insert “(assuming, in the case of a licence which has effect indefinitely,
that it were a licence of limited duration)”.
(7)
In section 35(1)(b) of that Act (particulars to be kept in register maintained by
OFT) for “force” substitute “effect”.
15
(8)
In section 37 of that Act (circumstances giving rise to termination of a licence)
after subsection (1) insert—
“(1A)
A licence terminates if the licensee gives the OFT a notice under
subsection (1B).
(1B)
A notice under this subsection shall—
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(a)
be in such form as the OFT may by general notice specify;
(b)
contain such information as may be so specified;
(c)
be accompanied by the licence or give reasons as to why it is not
accompanied by the licence; and
(d)
be signed by or on behalf of the licensee.”
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(9)
In subsection (3)(a) of that section after “(1)” insert “or (1A)”.
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Charges for indefinite licences
After section 28 of the 1974 Act insert—
“Charges for indefinite licences
28A
Charges to be paid by licensees etc. before end of payment periods
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(1)
The holder of a standard licence which has effect indefinitely shall, before the
end of each payment period of his, pay the OFT a charge towards the costs of
carrying out its functions under this Act.
(2)
The original applicant for a group licence which has effect indefinitely shall,
before the end of each payment period of his, pay the OFT such a charge.
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(3)
The amount of the charge payable by a person under subsection (1) or (2) before
the end of a payment period shall be determined in accordance with provision
which—
(a)
is made by the OFT by general notice; and
(b)
is current on the day which is the prescribed number of days before the
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end of the payment period.

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(4)
The provision that may be made by the OFT under subsection (3)
includes—
(a)
different provision in relation to persons of different
descriptions (including persons whose payment periods end at
different times);
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(b)
provision for no charge at all to be payable by persons of
specified descriptions.
(5)
The approval of the Secretary of State and the Treasury is required for
a general notice under subsection (3).
(6)
For the purposes of this section a person’s payment periods are to be
10
determined in accordance with provision made by regulations.”
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Extension of period to pay charge for indefinite licence
After section 28A of the 1974 Act (inserted by section 35 of this Act) insert—
“28B
Extension of period to pay charge under s. 28A
(1)
A person who is required under section 28A to pay a charge before the
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end of a period may apply once to the OFT for that period to be
extended.
(2)
The application shall be made no less than the specified number of
working days before the end of that period.
(3)
If the OFT is satisfied that there is a good reason—
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(a)
why the applicant has not paid that charge prior to his making
of the application, and
(b)
why he cannot pay that charge before the end of that period,

it may, if it thinks fit, by notice to him extend that period by such time
as it thinks fit having regard to that reason.
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(4)
The power of the OFT under this section to extend a period in relation
to a charge—
(a)
includes the power to extend the period in relation to a part of
the charge only;
(b)
may be exercised even though the period has ended.
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(5)
In this section ‘specified’ means specified by the OFT by general
notice.”
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Failure to pay charge for indefinite licence
(1)
After section 28B of the 1974 Act (inserted by section 36 of this Act) insert—
“28C
Failure to pay charge under s. 28A
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(1)
This section applies if a person (the ‘defaulter’) fails to pay a charge—
(a)
before the end of a period (the ‘payment period’) as required
under section 28A; or
(b)
where the payment period is extended under section 28B,
before the end of the payment period as extended (subject to
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subsection (2)).

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(2)
Where the payment period is extended under section 28B in relation to
a part of the charge only, this section applies if the defaulter fails—
(a)
to pay so much of the charge as is not covered by the extension
before the end of the payment period disregarding the
extension; or
5
(b)
to pay so much of the charge as is covered by the extension
before the end of the payment period as extended.
(3)
Subject to subsection (4), if the charge is a charge under section 28A(1),
the defaulter’s licence terminates.
(4)
If the defaulter has applied to the OFT under section 28B for the
10
payment period to be extended and that application has not been
determined—
(a)
his licence shall not terminate before the application has been
determined and the OFT has notified him of the determination;
and
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(b)
if the OFT extends the payment period on that application, this
section shall have effect accordingly.
(5)
If the charge is a charge under section 28A(2), the charge shall be
recoverable by the OFT.”
(2)
In section 35(1)(b) of that Act (particulars to be kept in register maintained by
20
OFT) after “revoked” insert “or terminated by section 28C”.
Further powers of OFT to regulate conduct of licensees etc.
38
Power of OFT to impose requirements on licensees
After section 33 of the 1974 Act insert—
“Further powers of OFT to regulate conduct of licensees etc.
25
33A
Power of OFT to impose requirements on licensees
(1)
This section applies where the OFT is dissatisfied with any matter in
connection with—
(a)
a business being carried on, or which has been carried on, by a
licensee or by an associate or a former associate of a licensee;
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(b)
a proposal to carry on a business which has been made by a
licensee or by an associate or a former associate of a licensee; or
(c)
any conduct not covered by paragraph (a) or (b) of a licensee or
of an associate or a former associate of a licensee.
(2)
The OFT may by notice to the licensee require him to do or not to do (or
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to cease doing) anything specified in the notice for purposes connected
with—
(a)
addressing the matter with which the OFT is dissatisfied; or
(b)
securing that matters of the same or a similar kind do not arise.
(3)
A requirement imposed under this section on a licensee shall only
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relate to a business which the licensee is carrying on, or is proposing to
carry on, under the licence under which he is a licensee.

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(4)
Such a requirement may be framed by reference to a named person
other than the licensee.
(5)
For the purposes of subsection (1) it is immaterial whether the matter
with which the OFT is dissatisfied arose before or after the licensee
became a licensee.
5
(6)
If—
(a)
a person makes an application for a standard licence, and
(b)
while dealing with that application the OFT forms the opinion
that, if such a licence were to be issued to that person, it would
be minded to impose on him a requirement under this section,
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the OFT may, before issuing such a licence to that person, do (in whole
or in part) anything that it must do under section 33D or 34(1) or (2) in
relation to the imposing of the requirement.
(7)
In this section ‘associate’, in addition to the persons specified in section
184, includes a business associate.”
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Power of OFT to impose requirements on supervisory bodies
After section 33A of the 1974 Act (inserted by section 38 of this Act) insert—
“33B
Power of OFT to impose requirements on supervisory bodies
(1)
This section applies where the OFT is dissatisfied with the way in
which a responsible person in relation to a group licence—
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(a)
is regulating or otherwise supervising, or has regulated or
otherwise supervised, persons who are licensees under that
licence; or
(b)
is proposing to regulate or otherwise to supervise such persons.
(2)
The OFT may by notice to the responsible person require him to do or
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not to do (or to cease doing) anything specified in the notice for
purposes connected with—
(a)
addressing the matters giving rise to the OFT’s dissatisfaction;
or
(b)
securing that matters of the same or a similar kind do not arise.
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(3)
A requirement imposed under this section on a responsible person in
relation to a group licence shall only relate to practices and procedures
for regulating or otherwise supervising licensees under the licence in
connection with their carrying on of businesses under the licence.
(4)
For the purposes of subsection (1) it is immaterial whether the matters
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giving rise to the OFT’s dissatisfaction arose before or after the issue of
the group licence in question.
(5)
If—
(a)
a person makes an application for a group licence, and
(b)
while dealing with that application the OFT forms the opinion
40
that, if such a licence were to be issued to that person, it would
be minded to impose on him a requirement under this section,

the OFT may, before issuing such a licence to that person, do (in whole
or in part) anything that it must do under section 33D or 34(1) or (2) in
relation to the imposing of the requirement.
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(6)
For the purposes of this Part a person is a responsible person in relation
to a group licence if—
(a)
he is the original applicant for it; and
(b)
he has a responsibility (whether by virtue of an enactment, an
agreement or otherwise) for regulating or otherwise
5
supervising persons who are licensees under the licence.”
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Supplementary provision relating to requirements
After section 33B of the 1974 Act (inserted by section 39 of this Act) insert—
“33C
Supplementary provision relating to requirements
(1)
A notice imposing a requirement under section 33A or 33B may include
10
provision about the time at or by which, or the period during which, the
requirement is to be complied with.
(2)
A requirement imposed under section 33A or 33B shall not have effect
after the licence by reference to which it is imposed has itself ceased to
have effect.
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(3)
A person shall not be required under section 33A or 33B to compensate,
or otherwise to make amends to, another person.
(4)
The OFT may by notice to the person on whom a requirement has been
imposed under section 33A or 33B vary or revoke the requirement
(including any provision made under subsection (1) of this section in
20
relation to it) with effect from such date as may be specified in the
notice.
(5)
The OFT may exercise its power under subsection (4) in relation to a
requirement either on its own motion or on the application of a person
falling within subsection (6) or (7) in relation to the requirement.
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(6)
A person falls within this subsection in relation to a requirement if he
is the person on whom the requirement is imposed.
(7)
A person falls within this subsection in relation to a requirement if—
(a)
the requirement is imposed under section 33A;
(b)
he is not the person on whom the requirement is imposed;
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(c)
the requirement is framed by reference to him by name; and
(d)
the effect of the requirement is—
(i)
to prevent him being an employee of the person on
whom the requirement is imposed;
(ii)
to restrict the activities that he may engage in as an
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employee of that person; or
(iii)
otherwise to prevent him from doing something, or to
restrict his doing something, in connection with a
business being carried on by that person.”
41
Procedure in relation to requirements
40
After section 33C of the 1974 Act (inserted by section 40 of this Act) insert—
“33D
Procedure in relation to requirements
(1)
Before making a determination—

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(a)
to impose a requirement on a person under section 33A or 33B,
(b)
to refuse an application under section 33C(5) in relation to a
requirement imposed under either of those sections, or
(c)
to vary or to revoke a requirement so imposed,

the OFT shall proceed as follows.
5
(2)
The OFT shall give a notice to every person to whom subsection (3)
applies in relation to the determination—
(a)
informing him, with reasons, that it is minded to make the
determination; and
(b)
inviting him to submit to it representations as to the
10
determination under section 34.
(3)
This subsection applies to a person in relation to the determination if he
falls within, or as a consequence of the determination would fall within,
section 33C(6) or (7) in relation to the requirement in question.
(4)
This section does not require the OFT to give a notice to a person if the
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determination in question is in the same terms as a proposal made to
the OFT by that person (whether as part of an application under this
Part or otherwise).”
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Guidance on requirements
After section 33D of the 1974 Act (inserted by section 41 of this Act) insert—
20
“33E
Guidance on requirements
(1)
The OFT shall prepare and publish guidance in relation to how it
exercises, or how it proposes to exercise, its powers by virtue of sections
33A to 33C.
(2)
If the OFT revises the guidance at any time after it has been published,
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the OFT shall publish it as revised.
(3)
The guidance shall be published in such manner as the OFT thinks fit
for the purpose of bringing it to the attention of those likely to be
affected by it.
(4)
In preparing or revising the guidance the OFT shall consult such
30
persons as it thinks fit.
(5)
In exercising its powers by virtue of sections 33A to 33C the OFT shall
have regard to the guidance as most recently published.”
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Consequential amendments relating to requirements
(1)
In section 23 of the 1974 Act (authorisation of specific activities by licence) after
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subsection (4) insert—
“(5)
An activity does not cease to be covered by a licence simply because it
involves a failure to comply with a requirement imposed under section
33A or 33B.”
(2)
In section 35(1) of that Act (particulars to be kept in register maintained by
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