Q&As

If a Consumer Credit Act 1974 (CCA 1974) secured loan is modified post 31 October 2004, will it become a regulated mortgage contract? Will the original CCA 1974 agreement be of any effect?

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Produced in partnership with Russell Kelsall LLB (Hull); LPC (Shef) of TLT
Published on LexisPSL on 24/07/2020

The following Financial Services Q&A produced in partnership with Russell Kelsall LLB (Hull); LPC (Shef) of TLT provides comprehensive and up to date legal information covering:

  • If a Consumer Credit Act 1974 (CCA 1974) secured loan is modified post 31 October 2004, will it become a regulated mortgage contract? Will the original CCA 1974 agreement be of any effect?
  • The changes to the consumer credit framework
  • Changes to consumer credit back book mortgage contracts since 21 March 2016
  • What about a regulated credit agreement secured on land which is not a consumer credit back book mortgage contract?
  • The effect of CCA 1974, s 82(3)

If a Consumer Credit Act 1974 (CCA 1974) secured loan is modified post 31 October 2004, will it become a regulated mortgage contract? Will the original CCA 1974 agreement be of any effect?

The changes to the consumer credit framework

The position with secured lending has been significantly complicated by the UK’s implementation of Directive 2014/17/EU, the EU Mortgage Credit Directive (MCD), on 21 March 2016. Before the MCD was implemented, the UK broadly had two regimes: a regulated mortgage contract regime and a regulated credit agreement regime. The regulated mortgage contract regime was (in broad terms) limited to lending secured on the borrower’s home by a first legal charge. The two regimes were, and are, mutually exclusive.

But to implement the MCD, HM Treasury made the Mortgage Credit Directive Order 2015 (MCDO 2015), SI 2015/910, and made changes to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO 2001), SI 2001/544. MCDO 2015, SI 2015/910 effectively transferred the majority of regulated credit agreements secured on land (so long as they fell into the definition of a ‘consumer credit back book mortgage

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