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Consumer Credit Bill


Consumer Credit Bill

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(2)   

In section 6 of that Act (which contains provision relating to applications) after

subsection (2) insert—

“(2A)   

The application must also be accompanied—

(a)   

in the case of an application for a licence or for the renewal of a

licence, by the charge payable by virtue of section 6A;

5

(b)   

in any other case, by the specified fee.”

(3)   

In section 191(1)(a) of that Act (special provisions as to Northern Ireland) after

“notices” insert “, charges”.

28      

Applications for standard licences

After section 24 of the 1974 Act insert—

10

“24A    

Applications for standard licences

(1)   

An application for a standard licence shall, in relation to each type of

business which is covered by the application, state whether the

applicant is applying—

(a)   

for the licence to cover the carrying on of that type of business

15

with no limitation; or

(b)   

for the licence to cover the carrying on of that type of business

only so far as it falls within one or more descriptions of

business.

(2)   

An application within subsection (1)(b) in relation to a type of business

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shall set out the description or descriptions of business in question.

(3)   

References in this Part to a type of business are references to a type of

business within subsection (4).

(4)   

The types of business within this subsection are—

(a)   

a consumer credit business;

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(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;

(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;

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(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

credit information services;

(i)   

a business so far as it comprises or relates to the operation of a

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credit reference agency.

(5)   

The OFT—

(a)   

shall by general notice specify the descriptions of business

which can be set out in an application for the purposes of

subsection (2) in relation to a type of business;

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(b)   

may by general notice provide that applications within

subsection (1)(b) cannot be made in relation to one or more of

the types of business within subsection (4)(c) to (i).

 
 

Consumer Credit Bill

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(6)   

The power of the OFT under subsection (5) includes power to make

different provision for different cases or classes of case.”

29      

Issue of standard licences

(1)   

In section 25 of the 1974 Act (licensee to be a fit person) for subsection (1)

substitute—

5

“(1)   

If an applicant for a standard licence—

(a)   

makes an application within section 24A(1)(a) in relation to a

type of business, and

(b)   

satisfies the OFT that he is a fit person to carry on that type of

business with no limitation,

10

   

he shall be entitled to be issued with a standard licence covering the

carrying on of that type of business with no limitation.

(1AA)   

If such an applicant—

(a)   

makes an application within subsection (1)(b) of section 24A in

relation to a type of business, and

15

(b)   

satisfies the OFT that he is a fit person to carry on that type of

business so far as it falls within the description or descriptions

of business set out in his application in accordance with

subsection (2) of that section,

   

he shall be entitled to be issued with a standard licence covering the

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carrying on of that type of business so far as it falls within the

description or descriptions in question.

(1AB)   

An applicant who fails, in relation to a type of business, to satisfy the

OFT as mentioned in subsection (1) or (1AA) shall be entitled to be

issued with a standard licence covering the carrying on of that type of

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business so far as it falls within one or more descriptions of business

if—

(a)   

he satisfies the OFT that he is a fit person to carry on that type

of business so far as it falls within the description or

descriptions in question;

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(b)   

he could have applied for the licence to be limited in that way;

and

(c)   

the licence would not cover the doing of something which was

not covered by his application.

(1AC)   

In this section ‘description of business’ means, in relation to a type of

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business, a description of business specified in a general notice under

section 24A(5)(a).

(1AD)   

An applicant shall not, by virtue of this section, be issued with a licence

unless he satisfies the OFT that the name or names under which he

would be licensed is or are not misleading or otherwise undesirable.”

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(2)   

For subsection (2) of that section substitute—

“(2)   

In determining whether an applicant for a licence is a fit person for the

purposes of this section the OFT shall have regard to any matters

appearing to it to be relevant including (amongst other things)—

(a)   

the applicant’s skills, knowledge and experience in relation to

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consumer credit businesses, consumer hire businesses or

ancillary credit businesses;

 
 

Consumer Credit Bill

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(b)   

such skills, knowledge and experience of other persons who the

applicant proposes will participate in any business that would

be carried on by him under the licence;

(c)   

practices and procedures that the applicant proposes to

implement in connection with any such business;

5

(d)   

evidence of the kind mentioned in subsection (2A).

(2A)   

That evidence is evidence tending to show that the applicant, or any of

the applicant’s employees, agents or associates (whether past or

present) or, where the applicant is a body corporate, any person

appearing to the OFT to be a controller of the body corporate or an

10

associate of any such person, has—

(a)   

committed any offence involving fraud or other dishonesty or

violence;

(b)   

contravened any provision made by or under—

(i)   

this Act;

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(ii)   

Part 16 of the Financial Services and Markets Act 2000 so

far as it relates to the consumer credit jurisdiction under

that Part;

(iii)   

any other enactment regulating the provision of credit to

individuals or other transactions with individuals;

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(c)   

contravened any provision in force in an EEA State which

corresponds to a provision of the kind mentioned in paragraph

(b);

(d)   

practised discrimination on grounds of sex, colour, race or

ethnic or national origins in, or in connection with, the carrying

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on of any business; or

(e)   

engaged in business practices appearing to the OFT to be

deceitful or oppressive or otherwise unfair or improper

(whether unlawful or not).”

(3)   

In subsection (3) of that section for “(2)” substitute “(2A)”.

30

30      

Guidance on fitness test

After section 25 of the 1974 Act insert­­­­­­—

“25A    

Guidance on fitness test

(1)   

The OFT shall prepare and publish guidance in relation to how it

determines, or how it proposes to determine, whether persons are fit

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persons as mentioned in section 25.

(2)   

If the OFT revises the guidance at any time after it has been published,

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

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affected by it.

(4)   

In preparing or revising the guidance the OFT shall consult such

persons as it thinks fit.

(5)   

In exercising and performing its powers and duties by virtue of this

Part the OFT shall have regard to the guidance as most recently

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published.”

 
 

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31      

Variation of standard licences etc.

(1)   

In section 30 of the 1974 Act (variation of licences by request) for subsection (1)

substitute—

“(1)   

If it thinks fit, the OFT may by notice to the holder of a standard

licence—

5

(a)   

in the case of a licence which covers the carrying on of a type of

business only so far as it falls within one or more descriptions of

business, vary the licence by—

(i)   

removing that limitation;

(ii)   

adding a description of business to that limitation; or

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(iii)   

removing a description of business from that limitation;

(b)   

in the case of a licence which covers the carrying on of a type of

business with no limitation, vary the licence so that it covers the

carrying on of that type of business only so far as it falls within

one or more descriptions of business;

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(c)   

vary the licence so that it no longer covers the carrying on of a

type of business at all;

(d)   

vary the licence so that a type of business the carrying on of

which is not covered at all by the licence is covered either—

(i)   

with no limitation; or

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(ii)   

only so far as it falls within one or more descriptions of

business; or

(e)   

vary any term of the licence not relating to the activities it

covers.

(1A)   

The OFT may vary a licence under subsection (1) only in accordance

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with an application made by the holder of the licence.

(1B)   

References in this section to a description of business in relation to a

type of business—

(a)   

are references to a description of business specified in a general

notice under section 24A(5)(a); and

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(b)   

in subsection (1)(a) (apart from sub-paragraph (ii)) include

references to a description of business that was, but is no longer,

so specified.”

(2)   

In subsection (1) of section 31 of that Act (compulsory variation of licences) for

“the licence should be varied” substitute “it should take steps mentioned in

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subsection (1A)”.

(3)   

After that subsection insert—

“(1A)   

Those steps are—

(a)   

in the case of a standard licence, steps mentioned in section

30(1)(a)(ii) and (iii), (b), (c) and (e);

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(b)   

in the case of a group licence, the varying of terms of the

licence.”

(4)   

After subsection (7) of that section insert—

“(8)   

Subsection (1) shall have effect in relation to a standard licence as if an

application could be made for the renewal or further renewal of the

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licence on the same terms (except as to expiry) even if such an

 
 

Consumer Credit Bill

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application could not be made because of provision made in a general

notice under section 24A(5).

(9)   

Accordingly, in applying subsection (1AA) of section 25 in relation to

the licence for the purposes of this section, the OFT shall treat

references in that subsection to the description or descriptions of

5

business in relation to a type of business as references to the description

or descriptions of business included in the licence in relation to that

type of business, notwithstanding that provision under section 24A(5).”

(5)   

In section 32 of that Act (suspension and revocation of licences) after

subsection (8) insert—

10

“(9)   

The OFT has no power to revoke or to suspend a standard licence

simply because, by virtue of provision made in a general notice under

section 24A(5), a person cannot apply for the renewal of such a licence

on terms which are the same as the terms of the licence in question.”

32      

Winding-up of standard licensee’s business

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(1)   

After section 34 of the 1974 Act insert—

“34A    

Winding-up of standard licensee’s business

(1)   

Where the OFT determines to take a step falling within subsection (2)

in relation to a standard licence, it may, if it thinks fit, defer the taking

of that step for such period as it thinks fit for the purpose of enabling

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the licensee to transfer or otherwise to wind up his business or any part

of his business.

(2)   

The steps falling within this subsection are—

(a)   

the refusal of an application for the renewal of the licence;

(b)   

the renewal of the licence in terms different to those applied for;

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(c)   

the variation of the licence under section 31;

(d)   

the suspension or revocation of the licence.

(3)   

Subject to subsection (4), where the OFT defers the taking of a step

falling within subsection (2), the licence shall continue in effect for the

period of the deferral—

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(a)   

on the same terms (disregarding the OFT’s determination to

take the step falling within subsection (2)); or

(b)   

in the case of a step falling within subsection (2)(b), on the terms

applied for;

   

and, in the case of a step falling within subsection (2)(a) or (b),

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notwithstanding that apart from this subsection the licence would

expire before the end of the period of the deferral.

(4)   

Where the OFT defers the taking of a step falling within subsection (2),

it may—

(a)   

specify activities or descriptions of activities which are to be

40

excluded from the activities authorised to be carried on by

virtue of subsection (3);

(b)   

specify requirements which must be complied with by the

licensee during the period of the deferral in relation to the

activities authorised to be carried on by virtue of that

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subsection;

 
 

Consumer Credit Bill

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(c)   

terminate the period of the deferral if the licensee fails to

comply with a requirement specified under paragraph (b).

(5)   

Under subsection (4)(a) an activity may be excluded for the whole of

the period of the deferral or for only a specified part of it.

(6)   

The OFT may—

5

(a)   

defer the taking of a step falling within subsection (2) in relation

to a licence only on the application of the licensee; and

(b)   

require the licensee’s application to be made (if one is to be

made at all) within the period of 21 days beginning with the day

on which the OFT gives the licensee a notice under this

10

subsection or within such longer period as the OFT may allow.

(7)   

If the licensee makes an application, unless the OFT determines to defer

the taking of the step falling within subsection (2) in accordance with

the application, it shall, before determining it, by notice—

(a)   

inform the licensee, giving its reasons, that (as the case may be)

15

it is minded to refuse the application, or to grant it in terms

different from those applied for, describing them; and

(b)   

invite the licensee to submit to the OFT representations in

support of his application in accordance with section 34.

(8)   

The OFT may—

20

(a)   

give a notice under subsection (6), and

(b)   

consider (in whole or in part) the licensee’s application,

   

before it determines whether to take the step falling within subsection

(2).

(9)   

Accordingly the OFT may, before it determines whether to take the step

25

falling within subsection (2), do (in whole or in part) anything that it

must do under subsection (7) or section 34(1) or (2) in relation to the

licensee’s application.”

(2)   

Sections 29(5) and 32(5) of that Act (which give the OFT power to give

directions allowing licensees to carry agreements into effect) shall cease to have

30

effect.

(3)   

In the Table in section 41 of that Act (appeals) before the entry relating to

“refusal to make order under section 40(2) in accordance with terms of

application” insert the following entry—

 

“Refusal under section

The applicant.”

 

35

 

34A to defer the taking of a

  
 

step in accordance with

  
 

terms of application.

  

33      

Consequential amendments relating to ss. 27 to 32

(1)   

In section 21(1) of the 1974 Act (businesses needing a licence) for “consumer

40

hire business” substitute “a consumer hire business or an ancillary credit

business”.

(2)   

In section 22 of that Act (standard and group licences) after subsection (5)

 
 

Consumer Credit Bill

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insert—

“(5A)   

A group licence to carry on a business may limit the activities it covers

in any way the OFT thinks fit.”

(3)   

In subsection (1) of section 23 of that Act (authorisation of specific activities) for

“this section” substitute “the terms of the licence”.

5

(4)   

In subsection (4) of that section for “Regulations may be made specifying”

substitute “The OFT may by general notice specify”.

(5)   

After section 27 of that Act insert—

“27A    

Standard licences held by consumer credit EEA firms

(1)   

A consumer credit EEA firm shall not be entitled to hold a standard

10

licence which covers any permitted activities.

(2)   

Accordingly—

(a)   

for the purposes of an application made by a consumer credit

EEA firm for a standard licence, sections 24A and 25 shall have

effect as if references to a type of business were references to a

15

type of business excluding all permitted activities;

(b)   

a standard licence issued to such a firm shall include a term

which has the effect of excluding from the licence all permitted

activities (an ‘EEA exclusion term’); and

(c)   

for the purposes of a standard licence which has an EEA

20

exclusion term, section 30(1) (including as applied by section

31(1A)) shall have effect as if references to a type of business

were references to a type of business excluding all activities

within the scope of that term.

(3)   

Where a standard licence has been issued to a consumer credit EEA

25

firm and—

(a)   

there is a change in the firm’s permitted activities in

consequence of which the licence covers a permitted activity,

and

(b)   

the OFT is notified by either the firm or the Financial Services

30

Authority of that change,

   

the OFT shall by notice to the firm vary the licence’s EEA exclusion

term so as to secure compliance with subsection (1).

(4)   

Where a standard licence has been issued to a consumer credit EEA

firm and—

35

(a)   

there is a change in the firm’s permitted activities in

consequence of which an activity that was a permitted activity

is no longer a permitted activity, or

(b)   

the firm ceases to be a consumer credit EEA firm,

   

the OFT may, if it thinks fit, by notice to the firm vary the licence’s EEA

40

exclusion term so as to remove the activity mentioned in paragraph (a)

from the scope of the term or, in a case within paragraph (b), vary the

licence so as to remove the EEA exclusion term.

(5)   

Subsections (1A) and (4) of section 30 shall apply in relation to a

variation of a standard licence under subsection (4) of this section as

45

they apply in relation to a variation of a standard licence under that

section.

 
 

 
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