Q&As

(A) wants to transfer a house held as an investment to her daughter, (B). The house is valued at £90,000. No funds are changing hands but (B) is to enter into a loan arrangement for the full value of the property for a term of 25 years. The loan will be secured by first legal charge. Interest will charged at 1.5% and repayment will be made on the death of the daughter or when the property is sold. Does this arrangement fall with the Consumer Credit Act 1974, or the Financial Services and Markets Act 2000?

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Published on LexisPSL on 17/12/2015

The following Financial Services Q&A provides comprehensive and up to date legal information covering:

  • (A) wants to transfer a house held as an investment to her daughter, (B). The house is valued at £90,000. No funds are changing hands but (B) is to enter into a loan arrangement for the full value of the property for a term of 25 years. The loan will be secured by first legal charge. Interest will charged at 1.5% and repayment will be made on the death of the daughter or when the property is sold. Does this arrangement fall with the Consumer Credit Act 1974, or the Financial Services and Markets Act 2000?
  • The regulation of consumer credit
  • Does the Consumer Credit Act 1974 apply?
  • What are the exemptions under the CCA 1974?

The regulation of consumer credit

The regulation of consumer credit now sits with the Financial Conduct Authority (FCA). In consequence parts of the Consumer Credit Act 1974 (CCA 1974) were repealed from 1 April 2014 with regulated activities coming under the Financial Services and Markets Act 2000 (FSMA 2000) and the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/554) (RAO 2001).

Does the Consumer Credit Act 1974 apply?

As a starting point, if the borrower is an individual receiving credit from a lender, then the agreement is a consumer credit agreement for the purposes of the CCA 1974. Whether that agreement will be considered a regulated consumer credit agreement, and therefore subject to the requirements of the CCA 1974, will depend whether or not an exemption applies.

What are the exemptions under the CCA 1974?

There are a number of detailed exemptions upon which individuals can rely contained in the Financial Services and Markets Act (Regulated Activities) Order 2001, SI 2001/544 (RAO). The exemptions are contained in articles 60C to 60H of the RAO, but it should be not

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