Select Committee on Regulatory Reform Third Report

1  Introduction

1.  The draft Legislative Reform (Consumer Credit) Order 2008 and the accompanying Explanatory Document (ED) were laid before Parliament by the Department for Business, Enterprise and Regulatory Reform on 17 June 2008 under section 14(1) of the Legislative and Regulatory Reform Act 2006 (LRRA).

2.  The purpose of the draft Order is to rectify distortions introduced into the Consumer Credit Act 1974 by the Consumer Credit Act 2006 and thereby exempt buy-to-let lending from regulation[1] in accordance with Government policy on mortgages, clarify the position on the giving of statements for fixed sum credit agreements and provide definitions of 'payments' for the purpose of issuing notices of sums in arrears. By doing this, the draft Order would remove burdens in terms of the financial costs which would arise if the proposed amendments were not made. The draft Order therefore aims to comply with section 1(2)[2] and section 1(3)[3] of the LRRA. Section 1 of the LRRA introduced power to remove or reduce burdens.

1   For a definition of 'regulated' and 'unregulated' loans see Q1 of the Appendix, p14. Back

2   Provisions may be made whose 'purpose is removing or reducing any burden, or the overall burdens, resulting directly or indirectly for any person from any legislation'. Back

3   Which amongst other things defines 'burden' as a 'financial cost'. Back

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Prepared 10 July 2008