Law firms and ancillary consumer credit business
Law firms and ancillary consumer credit business

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • Law firms and ancillary consumer credit business
  • What are ancillary consumer credit activities?
  • Definition of each activity
  • Related to a business
  • Occasional transactions
  • Litigation and advocacy exception
  • Exempt Professional Firms regime
  • The EPF regime for financial services
  • Does the EPF regime apply to consumer credit?
  • What sort of consumer credit activities can be conducted under the EPF regime?
  • More...

Law firms might be caught by the consumer credit regime:

  1. by entering into a consumer credit agreement as lender, eg in respect of their fees

  2. by engaging in ancillary consumer credit activities such as debt adjusting

This Practice Note deals with the second scenario—ancillary consumer credit activities. For more guidance on the implications of the consumer credit regime on your firm’s fee arrangements, see Practice Note: Consumer credit and client fee arrangements. For an overview of the consumer credit regime as it applies to law firms, see Practice Note: Consumer credit and law firms: from 1 April 2016.

It is an offence to engage in certain types of ancillary consumer credit activities without a licence. You will need a licence if:

  1. you engage in one of the following activities as set out in section 145 of the Consumer Credit Act 1974 (CCA 1974):

    1. credit brokerage

    2. debt-adjusting

    3. debt-counselling

    4. debt-collecting

    5. debt administration

    6. the provision of credit information services, or

    7. the operation of a credit reference agency

  2. in the course of a business, and

  3. the activity

    1. is not an occasional transaction

    2. does not fall within the litigation exception

    3. cannot be conducted under the Exempt Professional Firms regime because it is not incidental to your professional services

See also: Ancillary consumer credit—decision tree.

What are ancillary consumer credit activities?

CCA 1974, Pt X regulates seven specific types of ancillary credit business:

  1. credit brokerage

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