Consumer Credit Act 1974

Following the report of the Crowther Committee in 1971 it was decided that wide-ranging reform of consumer credit law was needed, and a bill to do this was introduced to Parliament.Despite its progress through Parliament being disrupted by a general election, the bill passed quickly through the legislative process thanks to support from both the government and the opposition, coming into law on 31 July 1974.Such traders were required to have full licenses, originally issued by the Office of Fair Trading, which may be suspended or revoked in the event of irregularities.Part 1 was repealed in its entirety, with oversight transferred from the Office of Fair Trading (now abolished) to the Financial Conduct Authority.This act had two main weaknesses, however; firstly, many of the debtors who would like to sue their moneylender to have the agreement cancelled were by definition poor, and could not afford legal representation.[6] Chaired by Lord Crowther, the Committee began sitting in December that year and eventually extended their review to cover consumer credit generally rather than just the bills of sale and moneylending they had initially been concerned with, and their report was finally published in March 1971.[7] The report discussed the economical, social and legal aspects of consumer credit, and concluded that the existing law was so confused and unsatisfactory that it was not worth amending.The reaction to the report from consumer and business organisations was overwhelmingly positive, but the government initially did nothing, since the Department of Trade and Industry wanted time to work out the particular details of any Acts.The government's official statement was that they were willing to accept almost all the recommendations made about consumer credit, they did not wish to legislate on lending and securities.[10] The Act was first introduced to Parliament as the Consumer Credit Bill at the beginning of November 1973, and initially ran to 96 pages.The DGFT was also tasked with advising the government about social and commercial developments within the United Kingdom, and any actions taken to enforce the Act and its orders and regulations.Section 4 of the act required him to disseminate any appropriate information and advice about consumer credit to the people of the United Kingdom."Goods" are defined as chattels personal, with "capable of subsisting" simply meaning that the agreement does not restrict the time limit of use to less than three months.[26] Contracts with a foreign element would not normally be mentioned in Acts of Parliament, which are deliberately constructed to avoid giving the law extraterritorial effect.In this case, however, the Act contains provisions for contracts with a foreign element, which due to the nature of commerce are common (a credit card issued in the United Kingdom, for example, which is used on holiday in France).These could only be provided following an application, not at the Director General's discretion like a group licence, and covered certain activities in a fixed period.Details of new licences were published in the Consumer Credit Bulletin, the weekly journal of the Office of Fair Trading.In R. v Delmayne [1970] 2 QB 170 the High Court of Justice decided that even replying to an enquiry can amount to an advertisement if framed in such a way that it is calculated to attract business.[35] Under Part IV, the Secretary of State can make regulations limiting the form and content of advertisements covered by the Act.The original provisions in the bill were indeed extremely stringent, and caused potential problems for other businesses, but were significantly amended and now only affect the canvassing they were intended to prevent.There is no requirement that the oral solicitations take place in person - they can come over the telephone, or be trying to induce another individual to convince the consumer into entering an agreement.The Act allows the Director General of Fair Trading to waive certain requirements if it appears, on the application of a consumer credit business, that to enforce them would be impracticable.He can withdraw the prospective agreement by notice to the other party, with the Act allowing the creditor to use credit brokers as agents for this purpose.This section provides for credit card issuers to be jointly and severally liable along with the supplier for compliance with the contract of supply.[45] The Act was the first attempt by the Government of the United Kingdom to provide coherent rules relating to the taking of securities when dealing with consumer credit.The courts are also prohibited from making enforcement orders where the owner or creditor did not give a copy of the agreement to the debtor or hirer before the contract commenced.[56] The courts have long held equitable jurisdiction to set aside "harsh and unconscionable bargains", but prior to the Consumer Credit Act this was mainly used in cases where uninformed tradespeople have been selling goods at a loss, and was rarely used in the 20th century.This is again a wide area; the base definition covers, for example, solicitors and accountants who act as negotiators for clients who owe money to a third party.[64] Credit reference agencies are covered separately from other ancillary credit businesses, and are defined in Section 148 as individuals or companies which carry on a business "comprising the furnishing of persons with information relevant to the financial standard of individuals, being information collected by the agency for that purpose".[12] The Act did not go to the full extent suggested by the Crowther Committee's report, with protection only being available for consumers, not for the credit industry.