Q&As

Can I accept payment of an outstanding bill by instalments: before or after 1 April 2016?

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Published on LexisPSL on 18/03/2016

The following Practice Compliance Q&A provides comprehensive and up to date legal information covering:

  • Can I accept payment of an outstanding bill by instalments: before or after 1 April 2016?

Can I accept payment of an outstanding bill by instalments: before or after 1 April 2016?

This Q&A answers a specific question: does an agreement to accept instalment payments of an outstanding bill constitute a consumer credit agreement for the purpose of the Consumer Credit Act 1974 (CCA 1974)? If yes, you will have to comply with onerous requirements in CCA 1974 regarding form, content and execution of a consumer credit licence. If no, CCA 1974 doesn't apply and you don't require a formal consumer credit agreement.

The first thing to say is that the answer to this question is unaffected by the 1 April 2016 changes to the SRA Financial Services (Scope) Rules, which merely formalise the existing position about whether you can enter into a credit agreement for fees without being regulated by the FCA (you can)—see Practice Note: Instalment payments of an outstanding bill—SRA changes.

You should also remember that the consumer credit regime affects only clients who are individuals and very small partnerships, as CCA 1974 does not apply to agreements with larger partnerships or corporate entities. See Practice Note: Consumer credit and client fee arrangements—What is a consumer credit agreement?

The SRA's view is that accepting instalment payments of an outstanding bill constitutes a

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