The following Practice Compliance guidance note provides comprehensive and up to date legal information covering:
There are two ways law firms might be caught by the consumer credit regime:
by entering into a fee arrangement with a client that constitutes a consumer credit agreement
by engaging in ancillary consumer credit activities such as debt adjusting
This Practice Note deals with the second scenario. For the first scenario, see Practice Note: Consumer credit and client fee arrangements. See also Practice Note: Law firms and consumer credit licensing—before 1 April 2016 [Archived].
It is an offence to engage in certain types of ancillary consumer credit activities without a licence. You will need a licence if:
you engage in one of the following activities as defined by section 145 of the Consumer Credit Act 1974 (CCA 1974):
the provision of credit information services, or
the operation of a credit reference agency
in the course of a business, and
is not an occasional transaction
does not fall within the litigation exception
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.
CCA 1974, Pt X regulates seven specific types of ancillary credit business:
the provision of credit information services, and
the operation of a credit reference
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