Consumer Credit Bill

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Consumer Credit Bill

Consumer Credit Bill
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(c)
no sum of interest, which has ever become payable under the
agreement in connection with such a default sum, is still owing;
and
(d)
no other sum of interest, which has ever become payable under
the agreement in connection with his failure to pay any sum
5
under the agreement when required, is still owing.
(6)
A notice under this section shall include a copy of the current arrears
information sheet under section 86A.
(7)
The debtor or hirer shall have no liability to pay any sum in connection
with the preparation or the giving to him of a notice under this section.
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(8)
Regulations may make provision about the form and content of notices
under this section.
(9)
In the case of an applicable agreement under which the debtor or hirer
must make all payments he is required to make at intervals of one week
or less, this section shall have effect as if in subsection (1)(a) and (c) for
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‘two’ there were substituted ‘four’.
(10)
In this section ‘applicable agreement’ means an agreement which—
(a)
is a regulated agreement for fixed-sum credit or a regulated
consumer hire agreement; and
(b)
is neither a non-commercial agreement nor a small agreement.”
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10
Notice of sums in arrears under running-account credit agreements
After section 86B of the 1974 Act (inserted by section 9 of this Act) insert—
“86C
Notice of sums in arrears under running-account credit agreements
(1)
This section applies where at any time the following conditions are
satisfied—
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(a)
that the debtor under an applicable agreement is required to
have made at least two payments under the agreement before
that time;
(b)
that the last two payments which he is required to have made
before that time have not been made;
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(c)
that the creditor has not already been required to give a notice
under this section in relation to either of those payments; and
(d)
if a judgment has been given in relation to the agreement before
that time, that there is no sum still to be paid under the
judgment by the debtor.
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(2)
The creditor shall, no later than the end of the period within which he
is next required to give a statement under section 78(4) in relation to the
agreement, give the debtor a notice under this section.
(3)
The notice shall include a copy of the current arrears information sheet
under section 86A.
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(4)
The notice may be incorporated in a statement or other notice which the
creditor gives the debtor in relation to the agreement by virtue of
another provision of this Act.

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(5)
The debtor shall have no liability to pay any sum in connection with the
preparation or the giving to him of the notice.
(6)
Regulations may make provision about the form and content of notices
under this section.
(7)
In this section ‘applicable agreement’ means an agreement which—
5
(a)
is a regulated agreement for running-account credit; and
(b)
is neither a non-commercial agreement nor a small agreement.”
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Failure to give notice of sums in arrears
After section 86C of the 1974 Act (inserted by section 10 of this Act) insert—
“86D
Failure to give notice of sums in arrears
10
(1)
This section applies where the creditor or owner under an agreement is
under a duty to give the debtor or hirer notices under section 86B but
fails to give him such a notice—
(a)
within the period mentioned in subsection (2)(a) of that section;
or
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(b)
within the period of six months beginning with the day after the
day on which such a notice was last given to him.
(2)
This section also applies where the creditor under an agreement is
under a duty to give the debtor a notice under section 86C but fails to
do so before the end of the period mentioned in subsection (2) of that
20
section.
(3)
The creditor or owner shall not be entitled to enforce the agreement
during the period of non-compliance.
(4)
The debtor or hirer shall have no liability to pay—
(a)
any sum of interest to the extent calculated by reference to the
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period of non-compliance or to any part of it; or
(b)
any default sum which (apart from this paragraph)—
(i)
would have become payable during the period of non-
compliance; or
(ii)
would have become payable after the end of that period
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in connection with a breach of the agreement which
occurs during that period (whether or not the breach
continues after the end of that period).
(5)
In this section ‘the period of non-compliance’ means, in relation to a
failure to give a notice under section 86B or 86C to the debtor or hirer,
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the period which—
(a)
begins immediately after the end of the period mentioned in (as
the case may be) subsection (1)(a) or (b) or (2); and
(b)
ends at the end of the day mentioned in subsection (6).
(6)
That day is—
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(a)
in the case of a failure to give a notice under section 86B as
mentioned in subsection (1)(a) of this section, the day on which
the notice is given to the debtor or hirer;

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(b)
in the case of a failure to give a notice under that section as
mentioned in subsection (1)(b) of this section, the earlier of the
following—
(i)
the day on which the notice is given to the debtor or
hirer;
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(ii)
the day on which the condition mentioned in subsection
(4)(a) of that section is satisfied;
(c)
in the case of a failure to give a notice under section 86C, the day
on which the notice is given to the debtor.”
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Notice of default sums
10
After section 86D of the 1974 Act (inserted by section 11 of this Act) insert—
“86E
Notice of default sums
(1)
This section applies where a default sum becomes payable under a
regulated agreement by the debtor or hirer.
(2)
The creditor or owner shall, within the prescribed period after the
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default sum becomes payable, give the debtor or hirer a notice under
this section.
(3)
The notice under this section may be incorporated in a statement or
other notice which the creditor or owner gives the debtor or hirer in
relation to the agreement by virtue of another provision of this Act.
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(4)
The debtor or hirer shall have no liability to pay interest in connection
with the default sum to the extent that the interest is calculated by
reference to a period occurring before the 29th day after the day on
which the debtor or hirer is given the notice under this section.
(5)
If the creditor or owner fails to give the debtor or hirer the notice under
25
this section within the period mentioned in subsection (2), he shall not
be entitled to enforce the agreement until the notice is given to the
debtor or hirer.
(6)
The debtor or hirer shall have no liability to pay any sum in connection
with the preparation or the giving to him of the notice under this
30
section.
(7)
Regulations may—
(a)
provide that this section does not apply in relation to a default
sum which is less than a prescribed amount;
(b)
make provision about the form and content of notices under this
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section.
(8)
This section does not apply in relation to a non-commercial agreement
or to a small agreement.”
13
Interest on default sums
After section 86E of the 1974 Act (inserted by section 12 of this Act) insert—
40
“86F
Interest on default sums
(1)
This section applies where a default sum becomes payable under a
regulated agreement by the debtor or hirer.

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(2)
The debtor or hirer shall only be liable to pay interest in connection
with the default sum if the interest is simple interest.”
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Default notices
(1)
In subsections (2) and (3) of section 88 of the 1974 Act (contents and effect of
default notice) for “seven” wherever occurring substitute “14”.
5
(2)
In subsection (4) of that section after “it” insert “and any other prescribed
matters relating to the agreement”.
(3)
After that subsection insert—
“(4A)
The default notice must also include a copy of the current default
information sheet under section 86A.”
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15
Enforceability of regulated agreements
In section 127 of the 1974 Act (enforcement orders in cases of infringement)
subsections (3) to (5) shall cease to have effect.
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Time orders
(1)
In subsection (1) of section 129 of the 1974 Act (time orders) before paragraph
15
(c) insert—
“(ba)
on an application made by a debtor or hirer under this
paragraph after he has been given a notice under section 86B or
86C; or”.
(2)
After that section insert—
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“129A
Debtor or hirer to give notice of intent etc. to creditor or owner
(1)
A debtor or hirer may make an application under section 129(1)(ba) in
relation to a regulated agreement only if—
(a)
following his being given the notice under section 86B or 86C,
he gave a notice within subsection (2) to the creditor or owner;
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and
(b)
a period of at least 14 days has elapsed after the day on which
he gave that notice to the creditor or owner.
(2)
A notice is within this subsection if it—
(a)
indicates that the debtor or hirer intends to make the
30
application;
(b)
indicates that he wants to make a proposal to the creditor or
owner in relation to his making of payments under the
agreement; and
(c)
gives details of that proposal.”
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(3)
In section 143(b) of that Act (provision which may be made by rules of court in
Northern Ireland) after “129(1)(b)” insert “or (ba)”.
(4)
In section 32(1) of the Sheriff Courts (Scotland) Act 1971 (c. 58) (regulation of
civil procedure in sheriff court) after paragraph (l) insert—
“(m)
permitting the debtor or hirer in proceedings for—
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(i)
a time order under section 129 of the Consumer Credit
Act 1974 (time orders), or
(ii)
variation or revocation, under section 130(6) of that Act
(variation and revocation of time orders), of a time order
made under section 129,
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to be represented by a person who is neither an advocate nor a
solicitor.”
(5)
In section 32(2B) of the Solicitors (Scotland) Act 1980 (c. 46) (offence for
unqualified persons to prepare certain documents)—
(a)
after “represent” insert “—(a)”;
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(b)
after “cause” insert—
“(b)
a debtor or hirer in proceedings for—
(i)
a time order under section 129 of the Consumer Credit
Act 1974 (time orders); or
(ii)
variation or revocation, under section 130(6) of that Act
15
(variation and revocation of time orders), of a time order
made under section 129”.
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Interest payable on judgment debts etc.
After section 130 of the 1974 Act insert—
“Interest
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130A
Interest payable on judgment debts etc.
(1)
If the creditor or owner under a regulated agreement wants to be able
to recover from the debtor or hirer post-judgment interest in connection
with a sum that is required to be paid under a judgment given in
relation to the agreement (the ‘judgment sum’), he—
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(a)
after the giving of that judgment, shall give the debtor or hirer
a notice under this section (the ‘first required notice’); and
(b)
after the giving of the first required notice, shall give the debtor
or hirer further notices under this section at intervals of not
more than six months.
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(2)
The debtor or hirer shall have no liability to pay post-judgment interest
in connection with the judgment sum to the extent that the interest is
calculated by reference to a period occurring before the day on which
he is given the first required notice.
(3)
If the creditor or owner fails to give the debtor or hirer a notice under
35
this section within the period of six months beginning with the day
after the day on which such a notice was last given to the debtor or
hirer, the debtor or hirer shall have no liability to pay post-judgment
interest in connection with the judgment sum to the extent that the
interest is calculated by reference to the whole or to a part of the period
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which—
(a)
begins immediately after the end of that period of six months;
and
(b)
ends at the end of the day on which the notice is given to the
debtor or hirer.
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(4)
The debtor or hirer shall have no liability to pay any sum in connection
with the preparation or the giving to him of a notice under this section.
(5)
A notice under this section may be incorporated in a statement or other
notice which the creditor or owner gives the debtor or hirer in relation
to the agreement by virtue of another provision of this Act.
5
(6)
Regulations may make provision about the form and content of notices
under this section.
(7)
This section does not apply in relation to post-judgment interest which
is required to be paid by virtue of any of the following—
(a)
section 4 of the Administration of Justice (Scotland) Act 1972;
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(b)
Article 127 of the Judgments Enforcement (Northern Ireland)
Order 1981;
(c)
section 74 of the County Courts Act 1984.
(8)
This section does not apply in relation to a non-commercial agreement
or to a small agreement.
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(9)
In this section ‘post-judgment interest’ means interest to the extent
calculated by reference to a period occurring after the giving of the
judgment under which the judgment sum is required to be paid.”
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Definition of “default sum”
(1)
After section 187 of the 1974 Act insert—
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“187A
Definition of ‘default sum’
(1)
In this Act ‘default sum’ means, in relation to the debtor or hirer under
a regulated agreement, a sum (other than a sum of interest) which is
payable by him under the agreement in connection with a breach of the
agreement by him.
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(2)
But a sum is not a default sum in relation to the debtor or hirer simply
because, as a consequence of his breach of the agreement, he is required
to pay it earlier than he would otherwise have had to.”
(2)
In section 189(1) of that Act (definitions) after the definition of “default notice”
insert—
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“‘default sum’ has the meaning given by section 187A;”.
Unfair relationships
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Unfair relationships between creditors and debtors
After section 140 of the 1974 Act insert—
“Unfair relationships
35
140A
Unfair relationships between creditors and debtors
(1)
The court may make an order under section 140B in connection with a
credit agreement if it determines that the relationship between the
creditor and the debtor arising out of the agreement (or the agreement

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taken with any related agreement) is unfair to the debtor because of one
or more of the following—
(a)
any of the terms of the agreement or of any related agreement;
(b)
the way in which the creditor has exercised or enforced any of
his rights under the agreement or any related agreement;
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(c)
any other thing done (or not done) by, or on behalf of, the
creditor (either before or after the making of the agreement or
any related agreement).
(2)
In deciding whether to make a determination under this section the
court shall have regard to all matters it thinks relevant (including
10
matters relating to the creditor and matters relating to the debtor).
(3)
For the purposes of this section the court shall (except to the extent that
it is not appropriate to do so) treat anything done (or not done) by, or
on behalf of, or in relation to, an associate or a former associate of the
creditor as if done (or not done) by, or on behalf of, or in relation to, the
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creditor.
(4)
A determination may be made under this section in relation to a
relationship notwithstanding that the relationship may have ended.
(5)
An order under section 140B shall not be made in connection with a
credit agreement which is an exempt agreement by virtue of section
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16(6C).”
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Powers of court in relation to unfair relationships
After section 140A of the 1974 Act (inserted by section 19 of this Act) insert—
“140B
Powers of court in relation to unfair relationships
(1)
An order under this section in connection with a credit agreement may
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do one or more of the following—
(a)
require the creditor, or any associate or former associate of his,
to repay (in whole or in part) any sum paid by the debtor or by
a surety by virtue of the agreement or any related agreement
(whether paid to the creditor, the associate or the former
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associate or to any other person);
(b)
require the creditor, or any associate or former associate of his,
to do or not to do (or to cease doing) anything specified in the
order in connection with the agreement or any related
agreement;
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(c)
reduce or discharge any sum payable by the debtor or by a
surety by virtue of the agreement or any related agreement;
(d)
direct the return to a surety of any property provided by him for
the purposes of a security;
(e)
otherwise set aside (in whole or in part) any duty imposed on
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the debtor or on a surety by virtue of the agreement or any
related agreement;
(f)
alter the terms of the agreement or of any related agreement;
(g)
direct accounts to be taken, or (in Scotland) an accounting to be
made, between any persons.
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(2)
An order under this section may be made in connection with a credit
agreement only—