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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Civil penalties
52
Power of OFT to impose civil penalties
After section 39 of the 1974 Act insert—
“39A
Power of OFT to impose civil penalties
(1)
Where the OFT is satisfied that a person (the ‘defaulter’) has failed or is
5
failing to comply with a requirement imposed on him by virtue of
section 33A, 33B or 36A, it may by notice to him (a ‘penalty notice’)
impose on him a penalty of such amount as it thinks fit.
(2)
The penalty notice shall—
(a)
set out the OFT’s reasons for determining to impose a penalty;
10
(b)
state the amount of the penalty that is being imposed;
(c)
set out the OFT’s reasons for determining that amount;
(d)
specify how the payment of the penalty may be made; and
(e)
specify the period within which the penalty is required to be
paid to the OFT.
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(3)
The amount of the penalty shall not exceed £50,000.
(4)
The period specified in the penalty notice for the purposes of
subsection (2)(e) shall not end earlier than the end of the period during
which an appeal may be brought against the imposition of the penalty
under section 41.
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(5)
If the defaulter does not pay the penalty to the OFT within the period
so specified—
(a)
the penalty shall be recoverable by the OFT; and
(b)
the unpaid balance from time to time shall carry interest at the
applicable rate.
25
(6)
For the purposes of subsection (5)(b) the applicable rate is—
(a)
in England and Wales and Scotland, the rate for the time being
specified in section 17 of the Judgments Act 1838;
(b)
in Northern Ireland, the rate for the time being applying to a
money judgment of the High Court.”
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53
Further provision relating to civil penalties
(1)
After section 39A of the 1974 Act (inserted by section 52 of this Act) insert—
“39B
Further provision relating to civil penalties
(1)
Before determining to impose a penalty on a person under section 39A
the OFT shall give a notice to that person—
35
(a)
informing him that it is minded to impose a penalty on him;
(b)
setting out its reasons for being so minded;
(c)
stating the proposed amount of the penalty;
(d)
setting out its reasons for proposing that amount;
(e)
setting out the proposed period for the payment of the penalty;
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and

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(f)
inviting him to submit representations to it about the matters
mentioned in the preceding paragraphs in accordance with
section 34.
(2)
In determining whether to impose a penalty on a person under section
39A and the amount of the penalty, the OFT shall have regard (amongst
5
other things) to—
(a)
any penalty or fine that has been imposed on that person by
another body in relation to the conduct giving rise to the failure
in question;
(b)
other steps that the OFT has taken or might take under this Part
10
in relation to that conduct.
(3)
General notice shall be given of the imposition of a penalty under
section 39A on a person who is a responsible person in relation to a
group licence.
(4)
That notice shall include the matters set out in the notice imposing the
15
penalty in accordance with section 39A(2)(a) to (c).”
(2)
In the Table in section 41 of that Act (appeals) after the entry relating to “refusal
under section 34A to defer the taking of steps in accordance with terms of
application” (inserted by section 32 of this Act) insert the following entry—

“Imposition of penalty
The person on whom the

20

under section 39A.
penalty is imposed.”

(3)
In section 181 of that Act (power to alter monetary limits etc.)—
(a)
in subsection (1) before “70(6)” insert “39A(3),”;
(b)
in subsection (2) before “75(3)(b)” insert “39A(3),”.
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Statement of policy in relation to civil penalties
25
After section 39B of the 1974 Act (inserted by section 53 of this Act) insert—
“39C
Statement of policy in relation to civil penalties
(1)
The OFT shall prepare and publish a statement of policy as regards the
imposition of penalties under section 39A and the determination of the
amounts of such penalties.
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(2)
If the OFT revises the statement of policy at any time after it has been
published, the OFT shall publish it as revised.
(3)
No statement of policy shall be published without the approval of the
Secretary of State.
(4)
The statement of policy shall be published in such manner as the OFT
35
thinks fit for the purpose of bringing it to the attention of those likely to
be affected by it.
(5)
In preparing or revising the statement of policy the OFT shall consult
such persons as it thinks fit.
(6)
In determining whether to impose a penalty on a person under section
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39A in relation to a failure, and in determining the amount of the

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penalty, the OFT shall have regard to the statement of policy as most
recently published at the time the failure occurred.
(7)
The OFT shall not impose a penalty on a person under section 39A in
relation to a failure occurring before it has published a statement of
policy.”
5
Appeals
55
The Consumer Credit Appeals Tribunal
(1)
After section 40 of the 1974 Act insert—
“Appeals
40A
The Consumer Credit Appeals Tribunal
10
(1)
There shall be a tribunal known as the Consumer Credit Appeals
Tribunal (‘the Tribunal’).
(2)
The Tribunal shall have the functions conferred on it by or under this
Part.
(3)
The Lord Chancellor may by rules make such provision as he thinks fit
15
for regulating the conduct and disposal of appeals before the Tribunal.
(4)
Schedule A1 (which makes provision about the Tribunal and
proceedings before it) shall have effect.”
(2)
Before Schedule 1 to that Act insert the Schedule A1 set out in Schedule 1 to this
Act.
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56
Appeals to the Consumer Credit Appeals Tribunal
(1)
In subsection (1) of section 41 of the 1974 Act (appeals) for the words from
“prescribed period” onwards substitute “specified period, appeal to the
Tribunal”.
(2)
After that subsection insert—
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“(1A)
The means for making an appeal is by sending the Tribunal a notice of
appeal.
(1B)
The notice of appeal shall—
(a)
be in the specified form;
(b)
set out the grounds of appeal in the specified manner; and
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(c)
include the specified information and documents.
(1C)
An appeal to the Tribunal is to be by way of a rehearing of the
determination appealed against.
(1D)
In this section ‘specified’ means specified by rules under section
40A(3).”
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(3)
Subsections (2) to (5) of that section shall cease to have effect.

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Appeals from the Consumer Credit Appeals Tribunal
In Part 3 of the 1974 Act after section 41 insert—
“41A
Appeals from the Consumer Credit Appeals Tribunal
(1)
A party to an appeal to the Tribunal may with leave appeal—
(a)
in England and Wales and Northern Ireland, to the Court of
5
Appeal, or
(b)
in Scotland, to the Court of Session,

on a point of law arising from a decision of the Tribunal.
(2)
For the purposes of subsection (1) leave to appeal may be given by—
(a)
the Tribunal; or
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(b)
the Court of Appeal or the Court of Session.
(3)
An application for leave to appeal may be made to the Court of Appeal
or the Court of Session only if the Tribunal has refused such leave.
(4)
If on an appeal under this section the court considers that the decision
of the Tribunal was wrong in law, it may do one or more of the
15
following—
(a)
quash or vary that decision;
(b)
substitute for that decision a decision of its own;
(c)
remit the matter to the Tribunal for rehearing and
determination in accordance with the directions (if any) given
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to it by the court.
(5)
An appeal may be brought from a decision of the Court of Appeal
under this section only if leave to do so is given by the Court of Appeal
or the House of Lords.
(6)
Rules under section 40A(3) may make provision for regulating or
25
prescribing any matters incidental to or consequential on an appeal
under this section.
(7)
In this section ‘party’ means, in relation to an appeal to the Tribunal,
the appellant or the OFT.”
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Consequential amendments relating to appeals
30
(1)
In section 2(7) of the 1974 Act (restriction on power to give directions to OFT)
for “Secretary of State” substitute “the Tribunal”.
(2)
In section 182 of that Act (regulations and orders) after subsection (1) insert—
“(1A)
The power of the Lord Chancellor to make rules under section 40A(3)
shall be exercisable by statutory instrument subject to annulment in
35
pursuance of a resolution of either House of Parliament.”
(3)
In subsection (2) of that section—
(a)
after “orders” wherever occurring insert “or rules”;
(b)
after “by the Secretary of State” insert “or by the Lord Chancellor”;
(c)
in paragraph (c) for “Secretary of State” substitute “person making
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them”.
(4)
In section 189(1) of that Act (definitions)—

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(a)
in the definition of “appeal period” for “Secretary of State” substitute
“Tribunal”;
(b)
after the definition of “total price” insert—
“‘the Tribunal’ means the Consumer Credit Appeals
Tribunal;”.
5
(5)
In Schedule 1 to the Tribunals and Inquiries Act 1992 (c. 53) (tribunals under
supervision of Council of Tribunals) after paragraph 9A insert—

“Consumer credit
9B. The Consumer Credit

Appeals Tribunal”.

Ombudsman scheme
10
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Financial services ombudsman scheme to apply to consumer credit licensees
(1)
After section 226 of the 2000 Act insert—
“226A
Consumer credit jurisdiction
(1)
A complaint which relates to an act or omission of a person (‘the
respondent’) is to be dealt with under the ombudsman scheme if the
15
conditions mentioned in subsection (2) are satisfied.
(2)
The conditions are that—
(a)
the complainant is eligible and wishes to have the complaint
dealt with under the scheme;
(b)
the complaint falls within a description specified in consumer
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credit rules;
(c)
at the time of the act or omission the respondent was the holder
of a standard licence;
(d)
the act or omission occurred in the course of a business being
carried on by the respondent which was of a type mentioned in
25
subsection (3);
(e)
at the time of the act or omission that type of business was
specified in an order made by the Secretary of State; and
(f)
the complaint cannot be dealt with under the compulsory
jurisdiction.
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(3)
The types of business referred to in subsection (2)(d) are—
(a)
a consumer credit business;
(b)
a consumer hire business;
(c)
a business so far as it comprises or relates to credit brokerage;
(d)
a business so far as it comprises or relates to debt-adjusting;
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(e)
a business so far as it comprises or relates to debt-counselling;
(f)
a business so far as it comprises or relates to debt-collecting;
(g)
a business so far as it comprises or relates to debt
administration;
(h)
a business so far as it comprises or relates to the provision of
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credit information services;
(i)
a business so far as it comprises or relates to the operation of a
credit reference agency.

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(4)
A complainant is eligible if—
(a)
he is an individual or he is a surety (whether or not he is an
individual) in relation to a security provided to the respondent
in connection with the business being carried on by the
respondent as mentioned in subsection (2)(d); and
5
(b)
he falls within a class of person specified in consumer credit
rules.
(5)
The approval of the Treasury is required for an order under subsection
(2)(e).
(6)
The jurisdiction of the scheme which results from this section is
10
referred to in this Act as the ‘consumer credit jurisdiction’.
(7)
In this Act ‘consumer credit rules’ means rules made by the scheme
operator with the approval of the Authority for the purposes of the
consumer credit jurisdiction.
(8)
Consumer credit rules under this section may make different provision
15
for different cases.
(9)
Expressions used in the Consumer Credit Act 1974 have the same
meaning in this section as they have in that Act.”
(2)
In Schedule 17 to that Act (the ombudsman scheme) after Part 3 insert the Part
3A set out in Schedule 2 to this Act.
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60
Funding of ombudsman scheme
In Part 16 of the 2000 Act after section 234 insert—
“234A
Funding by consumer credit licensees etc.
(1)
For the purpose of funding—
(a)
the establishment of the ombudsman scheme so far as it relates
25
to the consumer credit jurisdiction (whenever any relevant
expense is incurred), and
(b)
its operation in relation to the consumer credit jurisdiction,

the scheme operator may from time to time with the approval of the
Authority determine a sum which is to be recovered (other than by way
30
of fees under paragraph 16C of Schedule 17) from licensees to whom
this section applies and persons who make applications to which this
section applies.
(2)
A sum determined under subsection (1) may include a component to
cover the costs of the collection of that sum (‘collection costs’) from
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licensees and applicants in accordance with this section.
(3)
The scheme operator must notify the OFT of every determination
under subsection (1).
(4)
The OFT must give general notice of every determination so notified.
(5)
The OFT may by general notice impose requirements on—
40
(a)
licensees to whom this section applies, or
(b)
persons who make applications to which this section applies,

to pay amounts to the OFT for the purpose of collecting sums
determined under subsection (1).

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(6)
The amount payable by a person under such a requirement—
(a)
shall be the amount specified in or determined under the
general notice; and
(b)
shall be paid before the end of the period or at the time so
specified or determined.
5
(7)
A general notice under subsection (5) may—
(a)
impose requirements only on descriptions of licensees or
applicants specified in the notice;
(b)
provide for exceptions from any requirement imposed on a
description of licensees or applicants;
10
(c)
impose different requirements on different descriptions of
licensees or applicants;
(d)
make provision for refunds in specified circumstances.
(8)
Amounts received by the OFT from licensees and applicants must be
paid to the scheme operator.
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(9)
As soon as practicable after the end of—
(a)
each financial year of the scheme operator, or
(b)
if the OFT and the scheme operator agree that this paragraph is
to apply instead of paragraph (a), each period agreed by them,

the scheme operator must pay to the OFT an amount representing the
20
extent to which collection costs are covered in accordance with
subsection (2) by the total amount paid by the OFT to it during the year
or (as the case may be) the agreed period.
(10)
Amounts received by the OFT from the scheme operator are to be
retained by it for the purpose of meeting its costs.
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(11)
The Secretary of State may by order provide that the functions of the
OFT under this section are for the time being to be carried out by the
scheme operator.
(12)
An order under subsection (11) may provide that while the order is in
force this section shall have effect subject to such modifications as may
30
be set out in the order.
(13)
The licensees to whom this section applies are licensees under standard
licences which cover to any extent the carrying on of a type of business
specified in an order under section 226A(2)(e).
(14)
The applications to which this section applies are applications for—
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(a)
standard licences covering to any extent the carrying on of a
business of such a type;
(b)
the renewal of standard licences on terms covering to any extent
the carrying on of a business of such a type.
(15)
Expressions used in the Consumer Credit Act 1974 have the same
40
meaning in this section as they have in that Act.”
61
Consequential amendments relating to ombudsman scheme
(1)
In section 4 of the 1974 Act (OFT to disseminate information and advice) after
“the operation of this Act,” insert “the consumer credit jurisdiction under Part
16 of the Financial Services and Markets Act 2000,”.
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