Q&As

My client is purchasing a target company via a newco. The newco commercial premises will be leased jointly in the personal name of my client and the newco. The lender's will take a legal charge over the premises and a separate legal charge over the residential home of my client. Will this transaction fall within the consumer credit regime?

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Published on LexisPSL on 01/08/2017

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

  • My client is purchasing a target company via a newco. The newco commercial premises will be leased jointly in the personal name of my client and the newco. The lender's will take a legal charge over the premises and a separate legal charge over the residential home of my client. Will this transaction fall within the consumer credit regime?
  • Consumer Credit Regime
  • Exempt agreements under the RAO
  • The business exemption
  • Contract requirements
  • Regulated Mortgage Contracts
  • Taking security from individuals
  • Taking security from third parties—risk of undue influence

Consumer Credit Regime

Under section 19 of the Financial Services and Markets Act 2000 (FSMA 2000) a person cannot carry out a regulated activity, or purport to do so, in the UK unless they are either an authorised person (ie authorised by the Prudential Regulation Authority and/or the Financial Conduct Authority (FCA)), or an exempt person (eg by being an appointed representative). For an overview of the regulated activities regime in the UK, see Practice Note: What are regulated activities?

As you can see in this Practice Note, activities are regulated if they are of a ‘specified kind’ (ie specified by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544 (RAO 2001)) which is carried on by way of business. For more information about what it means to carry on a regulated activity by way of business in the UK, see Practice Notes: What does 'by way of business' mean? and Territorial scope of the general prohibition.

The regulated activities contained in the RAO 2001 include activities relating to consumer credit and regulated mortgage contracts (RMCs), including entering into a regulated credit agreement as lender and entering into RMCs.

Chapter 14A of the RAO 2001, SI 2001/544 provides that entering into a regulated credit agreement is a regulated activity under RAO 2001, SI 2001/544 (RAO 2001, SI 2001/544, Article 60B). Chapt

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