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How will the Consumer Rights Act 2015 (CRA 2015) affect financial services contracts? In advance of the coming into force of CRA 2015 on 1 October 2015, Nikki Worden, a partner at Addleshaw Goddard, explains how it will affect those involved in financial services contracts.
What are the key features of CRA 2015 for those involved in financial services contracts?
CRA 2015 will have an impact on financial services providers if they enter into contracts with consumers. A ‘consumer’ is defined as ‘an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession’. This departs slightly from other consumer legislation which apply in the context of financial services by introducing the concept of someone acting ‘wholly or mainly’ for non-business purposes. By contrast, for example, the Financial Services (Distance Marketing) Regulations 2004, SI 2004/2095 define a consumer as ‘any individual who...is acting for purposes which are outside any business he may carry on’.
CRA 2015 applies to all ‘contracts for the transfer of goods’ including conditional sale, hire and hire-purchase contracts. A financial services firm entering into these kinds of financial services contracts will be a ‘trader’ under CRA 2015 and will therefore be responsible for delivering the new remedies that consumers will have in relation to defective goods set out in CRA 2015, Pt 1. This may require closer liaison with the dealers and suppliers from whom such firms source their goods. Note that the new definition of ‘consumer’ will bring into scope sole traders and home-workers, who, for example, hire or buy goods on hire purchase for both home and business use, provided that the purchase is primarily for non-business purposes.
CRA 2015, Pt 2 will replace the Unfair Terms in Consumer Contracts Regulations 1999, SI 1999/2083 (UTCCR) for new contracts entered into from 1 October 2015. In conjunction with this, the Competition and Markets Authority (CMA) has issued new guidance on compliance with the requirements of
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