What is credit and what is a regulated consumer credit agreement?
What is credit and what is a regulated consumer credit agreement?

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • What is credit and what is a regulated consumer credit agreement?
  • Scope of this Practice Note
  • Regulated activities relating to consumer credit
  • Meaning of credit under the CCA 1974 and RAO
  • Regulated consumer credit agreements defined
  • The nature of the borrower
  • Exempt consumer credit agreements
  • Classification of consumer credit agreements
  • Hire purchase and conditional sale
  • Fixed-sum versus running account
  • More...

Scope of this Practice Note

There are several factors to consider when deciding whether or not a credit agreement is regulated under the regulatory framework of the Financial Services and Markets Act 2000 (FSMA 2000) and its secondary legislation, the Consumer Credit Act 1974 (CCA 1974) and its secondary legislation, and rules and guidance in the Financial Conduct Authority (FCA) Handbook, including its Consumer Credit sourcebook (CONC) . There are a large number of detailed exemptions which are contained in the Financial Services and Markets Act (Regulated Activities) Order 2001, SI 2001/544 (RAO). The exemptions apply depending on the type of consumer credit agreement and its main features. It is, therefore, important to understand how to recognise the different types of consumer credit agreements covered by FSMA 2000, the CCA 1974 and subordinate legislation and rules.

The term ‘regulated agreement’ as defined in CCA 1974, s 189 includes both regulated credit agreements and regulated consumer hire agreements. This Practice Note sets out what is meant by the terms ‘credit’ and regulated credit agreement’, as well as the types of credit agreements that are ‘regulated credit agreements’ and therefore fall within their regulation. It does not consider regulated consumer hire agreements.

Regulated activities relating to consumer credit

The definition of a regulated credit agreement is set out in article 60B of the RAO and is key to determining if

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