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92-519: The Standards of Lending Practice for personal customers covers loans , credit cardis , charge cards and overdrafts . The Standards of Lending Practice for business customers covers loans, credit cards, charge cards and overdrafts, with a separate set of Standards covering asset finance . Each section of the Standards contains: While a number of these outcomes are well established within firms, new areas do emerge from time to time. As and when they do,

184-463: A Consumer Sale and Loan Act which would regulate consumer credit and establish a licensed system for its use. The reaction to the report from consumer and business organisations was overwhelmingly positive, but the government initially did nothing, since the Department of Trade and Industry wanted time to work out the particular details of any Acts. Their hand was eventually forced by Baroness Phillips

276-495: A charity, a friendly society , a trade union, an insurance company or "a body corporate named or specifically referred to in any public general Act". A regulated consumer hire agreement is defined as an agreement between two bodies, one of whom (the hirer) is an individual, and the other of whom, (the owner) is a person, by which goods are loaned to the hirer for use without an option to purchase. The agreement must be "capable of subsisting" for longer than three months, not require

368-485: A combination of both. Such loans may be made by foreign governments to developing countries or may be offered to employees of lending institutions as an employee benefit (sometimes called a perk ). Loans can also be categorized according to whether the debtor is an individual person (consumer) or a business. Common personal loans include mortgage loans , car loans, home equity lines of credit, credit cards , installment loans , and payday loans . The credit score of

460-537: A comprehensive code regulating the consumer credit and consumer hire fgb and almost every aspect of a credit granting operation". The office of Director General of Fair Trading was created by the Fair Trading Act 1973 , with the Director appointed by the government for a five-year term. Consumer credit was not originally part of his duties (although the scope of his role did contain some elements of consumer credit) and

552-401: A court order. The Act does not provide for any civil or criminal sanctions for creditors who enforce the agreement without a court order, however, but it may lead to the revocation or suspension of the creditor's license. Part IX gives the courts wide powers to re-open credit deals deemed extortionate and gives them control over regulated agreements. Section 189 establishes that "courts" means

644-503: A credit card to pay for goods valued between £100 and £30,000 where the goods are not delivered or do not match the description given of the goods, or where the condition or functionality of the goods has been misrepresented . This section provides for credit card issuers to be jointly and severally liable along with the supplier for compliance with the contract of supply. Originally this provision applied to payments for goods valued between £30 and £10,000. The limits were increased under

736-411: A direct auto loan, a bank lends the money directly to a consumer. In an indirect auto loan, a car dealership (or a connected company) acts as an intermediary between the bank or financial institution and the consumer. Other forms of secured loans include loans against securities – such as shares, mutual funds, bonds, etc. This particular instrument issues customers a line of credit based on the quality of

828-562: A few provisions in the Hire-Purchase Acts. The Consumer Credit Act devoted an entire part of the Act to security, mostly between debtor and creditor, with third-party rights and regulations mostly governed by common law . The Act provides the form of securities, requires certain information and documents to be supplied, controls the enforcement of securities and provides certain circumstances in which securities can be considered void. "Security"

920-506: A foreign element, which due to the nature of commerce are common (a credit card issued in the United Kingdom, for example, which is used on holiday in France). As a result, Section 16(5) specifically excludes contracts "having a connection with a country outside the United Kingdom" from the Act. The previous Acts on commercial credit provided no mechanism to regulate and enforce the rules, and

1012-553: A group licence, and covered certain activities in a fixed period. Initially there was no obligation to issue licences, but an amendment to the bill in Parliament means that the Director General is required to issue a licence on the application of any person, providing that person is a fit person to engage in such activities and the name he applies to be licensed under is not misleading or undesirable. The licence allows an individual or

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1104-594: A more comprehensive overhaul of all financial regulation. An amending order made under that Act in 2013 removed large swathes of the Consumer Credit Act. Part 1 was repealed in its entirety, with oversight transferred from the Office of Fair Trading (now abolished) to the Financial Conduct Authority . Many substantive regulations were also removed, but in many cases these were (broadly speaking) restated in

1196-478: A partnership to trade under those names listed on the licence, and is divided into seven categories: Holders of a licence were obliged to inform the Director General when there is a change made within the office of a corporate licensee, an unincorporated body or a partnership. This must be done within 21 days of the change occurring. Details of new licences were published in the Consumer Credit Bulletin ,

1288-564: A prospective agreement at any point before it becomes a contract without obligations. He can withdraw the prospective agreement by notice to the other party, with the Act allowing the creditor to use credit brokers as agents for this purpose. The right to cancel a confirmed agreement was introduced by the Hire-Purchase Act 1964 , mainly to frustrate doorstep salesmen who would take advantage of an unsuspecting person and force them to sign up to an agreement, normally with misrepresentations. In

1380-432: A regulated credit agreement had to contain prescribed information about the amount of credit, the length of any fixed term loan, the amount of monthly repayments and so on. If a lender failed to comply with the prescribed regulations then the agreement would not be "properly executed" under section 61 and could then be challenged as "irredeemably unenforceable" under section 127. Part V contains several provisions relating to

1472-581: A result of the restrictions on business caused by the Moneylenders Act 1927, the idea of hire-purchase developed. These were first regulated by the Hire-Purchase and Small Debt (Scotland) Act 1932 , which only covered Scotland ; England and Wales was first covered by the Hire-Purchase Act 1938 , later amended by the Hire-Purchase Act 1954 and the Hire-Purchase Act 1964 . The 1965 Act applied to all hire-purchase agreements worth less than £2,000 and when

1564-469: A trustee. Such provisions covered both individual, unincorporated bodies and partnerships who are licence holders. These provisions did not cover corporate bodies, because following consultations the Government became aware that the liquidation and winding-up of a corporate body would pose problems with licensing, largely because the body continues to trade through a liquidator. The Act specifically controls

1656-483: A year later, who initiated a debate in the House of Lords on the matter. The government's official statement was that they were willing to accept almost all the recommendations made about consumer credit, they did not wish to legislate on lending and securities. In February 1973, they created a voluntary code which they expected those lending to observe. The code set out guidelines for loaning money to individuals and disclosing

1748-475: Is a loan on which the interest is reduced by an explicit or hidden subsidy . In the context of college loans in the United States , it refers to a loan on which no interest is accrued while a student remains enrolled in education. A concessional loan, sometimes called a "soft loan", is granted on terms substantially more generous than market loans either through below-market interest rates, by grace periods, or

1840-418: Is a typical source of funding. A secured loan is a form of debt in which the borrower pledges some asset (i.e., a car, a house) as collateral . A mortgage loan is a very common type of loan, used by many individuals to purchase residential or commercial property. The lender, usually a financial institution, is given security – a lien on the title to the property – until

1932-410: Is an individual, and the other of whom (the creditor) is "any other person", in which the creditor provides the debtor with credit not exceeding £5,000 (this figure was subsequently increased to £25,000 and under the Consumer Credit Act 2006 there is no upper limit). An exception to this definition is so-called "exempt agreements", which are agreements made where the creditor is a land improvement company,

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2024-420: Is at risk of damage or deprecation, they can give protection orders preventing the use of the property. This re-enacts Section 35 of the Hire-Purchase Act 1965 , which was repealed by the Consumer Credit Act. Other orders are "special orders", covered by Section 133 of the Act. There are two types; return orders and transfer orders. Return orders are orders from the court requiring the return of goods covered by

2116-470: Is defined by the Act to mean any form of mortgage , bond , indemnity, guarantee or other right provided by the debtor as "security" to the consumer credit or hire-purchase agreement being conducted with the creditor. This covers both "real" securities such as mortgages and personal securities such as bonds. The only requirement is that the security must be given at the request of the debtor. Any security must be expressed in writing, and in some cases are part of

2208-545: Is described in Section 61 as a document which contains all the prescribed terms, other than implied terms, and is, when presented to the debtor or hirer for signature, in such a state that all its terms are legible. Such a document must be in the form "prescribed by regulations". The regulations in question are the 1983 Regulations (Consumer Credit (Agreements) Regulations 1983 (SI 1983/1553)). These regulations laid down specific rules regarding certain "prescribed terms". For example,

2300-418: Is discharged of indebtedness. Thus, if a debt is discharged, then the borrower essentially has received income equal to the amount of the indebtedness. The Internal Revenue Code lists "Income from Discharge of Indebtedness" in Section 61(a)(12) as a source of gross income . Example: X owes Y $ 50,000. If Y discharges the indebtedness, then X no longer owes Y $ 50,000. For purposes of calculating income, this

2392-613: Is given as any discussion which produces a legal relationship; a contract]. As such the decision of courts as to whether an agreement constituted an "agreement" under the Act rests with English common law, and thus is not discussed within the Act. In many cases this is largely academic, however, since unless one party tries to contest the existence of a contract, any agreement can proceed regardless of its validity under English contract law . Partially regulated agreements are those consumer hire or consumer credit agreements which are not an exempt agreement but are exempt from certain provisions of

2484-409: Is not based upon credit score but rather credit rating . The most typical loan payment type is the fully amortizing payment in which each monthly rate has the same value over time. The fixed monthly payment P for a loan of L for n months and a monthly interest rate c is: For more information, see monthly amortized loan or mortgage payments . Predatory lending is one form of abuse in

2576-482: Is not followed are unenforceable without an order from the courts. There are certain formalities for entry into a regulated agreement, mostly based on the documentation that must be provided. Under Section 60, the Secretary of State is required to make certain regulations covering the format that contracts must take. These regulations must ensure that the debtor is made aware of the rights and/or duties conferred on him by

2668-410: Is not involved in a consumer credit business, consumer hire business or a business in which he provides credit to individuals. Under Part IV, the Secretary of State can make regulations limiting the form and content of advertisements covered by the Act. The regulations can also specifically include certain terms or facts, and failing to follow them constitutes an offence. The intent of these regulations

2760-609: Is now performed by the Court, on application.) A licence could be terminated on the death of the licensee, the licensee becoming bankrupt, the licensee becoming a patient under the Mental Health Act 1959 , a bankruptcy deal under the Bankruptcy Act 1914 in which the licence is given to a trustee or a deal under the Deeds of Arrangement Act 1914 in which the licensee's licence is handed to

2852-409: Is presented to be signed, it must give all the terms and conditions other than implied terms, a copy must also be presented and if the security is provided before the regulated agreement is made, a copy of the security agreement must be given to the debtor within seven days of the regulated agreement being made. If the formalities are not complied with the security agreement becomes unenforceable without

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2944-444: Is to ensure that no advertisement contains misleading information, that advertisements provide the reader with a "reasonable picture" of the terms and conditions and that the reader is aware that the availability and terms of credit may be affected by factors such as the age and employment of the applicant. The Crowther Committee recommended that doorstep canvassing for loans should be completely prohibited. The original provisions in

3036-540: Is treated the same way as if Y gave X $ 50,000. For a more detailed description of the "discharge of indebtedness", look at Section 108 ( Cancellation-of-debt income ) of the Internal Revenue Code . US specific: Consumer Credit Act 1974 The Consumer Credit Act 1974 (c. 39) is an Act of the Parliament of the United Kingdom that significantly reformed the law relating to consumer credit within

3128-488: Is willing to provide credit or provide goods to be hired. "advertisement" is taken to mean any form of advertisement, including a publication, television or radio broadcast, the display of signs, labels or goods, the distribution of samples, circulars, catalogues or price lists or the exhibition of picture, models or films, or in "any other way". Previous legislation such as the Advertisements (Hire-Purchase) Act 1967 limited

3220-566: The Consumer Credit (Increase of Monetary Limits) Order 1983, effective from 1 January 1984 (for the lower limit increase to £100) and 20 May 1985 (for the upper limit increase to £30,000). The Act was the first attempt by the Government of the United Kingdom to provide coherent rules relating to the taking of securities when dealing with consumer credit. Other than the Bills of Sale Acts there had been little law on securities before this, apart from

3312-610: The Crowther Committee had recommended the creation of a separate Consumer Credit Commissioner, something included in the original bill. When the bill was resurrected after the February 1974 general election, however, it was decided that the duties should instead be given to the Office of Fair Trading, and for this purpose a separate division (the Division of Consumer Credit) was set up within

3404-464: The High Court of Justice decided that even replying to an enquiry can amount to an advertisement if framed in such a way that it is calculated to attract business. Part IV only applies to "public" advertising published to promote a business — as such circulars given to employees advertising such terms would not be considered "advertisements". Advertisements are not regulated by the Act if the advertiser

3496-471: The Law Society of England and Wales and the Law Society of Northern Ireland , both professional associations of solicitors . The Director had the ability to exclude named individuals from group licences to prevent obvious abuse. Standard licences were licences issued by the Director General to an individual. These could only be provided following an application, not at the Director General's discretion like

3588-746: The Office of Fair Trading , which may be suspended or revoked in the event of irregularities. The Act also regulates what may be taken as security , limits the ways in which credit organisations can advertise and gives the County Court the ability to intercede in the case of unfair or unjust credit agreements. It also gives additional rights to the debtor, including certain limited rights to cancel concluded agreements. The Act has seen multiple amendments, both small and large. The Consumer Credit Act 2006 (an amending act) inserted many further provisions, which sought to further strengthen protection for consumers. The Financial Services and Markets Act 2000 represented

3680-539: The Regulated Activities Order . Consumer credit regulation was ignored by both Parliament and the courts for over 800 years, with the judges and Members of Parliament taking the attitude that there was no reason to interfere with fairly concluded contracts . The first piece of legislation to deal with consumer credit was the Bills of Sale Act 1854 , which required bills of sale to be registered. This allowed

3772-540: The United Kingdom . The act remains in force, albeit heavily amended and partially replaced. Prior to the Consumer Credit Act, legislation covering consumer credit was slapdash and focused on particular areas rather than consumer credit as a whole, such as moneylenders and hire-purchase agreements. Following the report of the Crowther Committee in 1971 it was decided that wide-ranging reform of consumer credit law

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3864-507: The county court ; all problems are to be brought to the county court, although certain situations relating to extortionate credit agreements can be sent to the High Court . The courts are allowed to issue enforcement orders for cases where the contract has been infringed upon, except in situations where the contract has not been signed or the terms are not set out in the contract, in which case they are permanently unenforceable. The courts are also prohibited from making enforcement orders where

3956-522: The 1900 and 1927 Acts also covered commercial transactions, and since people lending money in a commercial area were not excluded as banks were, a slight infraction could make a loan completely irrecoverable. This was partially solved with the passing of the Companies Act 1967 , which allowed the Board of Trade to give individual moneylenders licenses saying that they were acting as banks, not moneylenders. As

4048-479: The Act and its orders and regulations. Section 4 of the act required him to disseminate any appropriate information and advice about consumer credit to the people of the United Kingdom. This allowed him to educate the public about consumer credit, and was intended to be conducted through organisations such as the Citizens Advice Bureau . The Director's duties under this Act overlap slightly with those given by

4140-476: The Act as agreements where neither the creditor nor debtor are providing the transaction for business purposes in any way. Non-commercial agreements are exempt from Part V of the Act. Contracts with a foreign element would not normally be mentioned in Acts of Parliament, which are deliberately constructed to avoid giving the law extraterritorial effect. In this case, however, the Act contains provisions for contracts with

4232-479: The Act continues, however, with the substance of Part III now taken into the Regulated Activities Order. There were two types of licence given – group licences and standard licences. Group licences were issued by the Director General of Fair Trading to cover a group of people in those activities described in the licence. Group licences could be issued following an application, or simply voluntarily by

4324-425: The Act deals with four elements of entering into a credit or hire agreement; pre-contract disclosure, the formalities of entry into a regulated agreement, cancellation of a regulated agreement and its consequences and withdrawal from a prospective regulated agreement and its consequences. In some cases, specific information must be disclosed before a contract is made, with the standard provision that contracts where this

4416-486: The Act. What these provisions are depends on the type of agreement; small agreements, non-commercial agreements and contracts with a foreign element. Small agreements are defined in Section 17 of the act as regulated consumer credit agreements where the credit does not exceed £30 and regulated consumer hire agreements which do not require the hirer to pay more than £30 in fees. This does not include hire-purchase or conditional sale agreements, which do not qualify regardless of

4508-416: The Consumer Credit Act was the first statute to provide such controls for consumer credit organisations. It covers three main areas: advertising, canvassing and quotations and the display of information. No regulations have yet been made on quotations or the display of information. The advertising provisions apply to any advertisement published for the business carried out by the advertiser which indicates he

4600-562: The Consumer Credit Act's licensing system was the first major regulatory process within British consumer credit law. Licences are required to carry out a consumer credit or consumer hire business, with exceptions for local authorities and corporate bodies specified by an Act of Parliament. Part III of the Act was repealed in 2013, and since then these licences have been the responsibility of the Financial Conduct Authority. The policy of

4692-438: The Consumer Credit Act, the right of cancellation is covered in Section 67, which allows the debtor or hirer the right to cancel an agreement if there were false oral representations made to the debtor by somebody acting for the creditor. The cancellation may be enacted by serving a notice of writing given to the creditor or an agent of the creditor within six days of the agreement being made. Section 75 protects consumers who use

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4784-498: The Director. Holders of a group licence do not have to apply individually and are not vetted individually, and holding a group licence does not prevent members from also applying for a standard licence. The group licences are intended for cases where individual screening is not in the public interest; for example, when bodies are so large and established that their reputation is without question and individual screening would take too much time. Bodies currently holding group licences include

4876-544: The Fair Trading Act, but were still an expansion over his original role. The Director General was tasked with issuing licenses, and under Section 35 of the Act, the Director was required to maintain a register containing all appropriate information related to licenses and applications for licenses. The register was created on 2 February 1976, and was kept at Chancery House in London. The Enterprise Act 2002 formally substituted

4968-487: The OFT. Section 1 of the Act gave the Director General of Fair Trading the duties of administering the licensing system set up by the Act, supervising the working and enforcement of the Act and any regulations made by it and, if appropriate, enforce the Act and regulations himself. The DGFT was also tasked with advising the government about social and commercial developments within the United Kingdom, and any actions taken to enforce

5060-441: The Office of Fair Trading for the Director General of Fair Trading for the purposes of this Act. Part II contains definitions for many types of agreements covered by the Act. There are three main types of agreement; regulated consumer credit agreements, regulated consumer hire agreements and partially regulated agreements. A regulated consumer credit agreement is defined as an agreement between two parties, one of whom (the debtor)

5152-432: The Standards of Lending Practice will evolve to help registered firms develop their approach to them. This United Kingdom bank or insurance-related article is a stub . You can help Misplaced Pages by expanding it . Loan In finance , a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for

5244-481: The United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974 . Interest rates on unsecured loans are nearly always higher than for secured loans because an unsecured lender's options for recourse against the borrower in the event of default are severely limited, subjecting the lender to higher risk compared to that encountered for a secured loan. An unsecured lender must sue

5336-421: The acceptable interest rate has varied, from no interest at all as in the biblical prescript, to unlimited interest rates. Credit card companies in some countries have been accused by consumer organizations of lending at usurious interest rates and making money out of frivolous "extra charges". Abuses can also take place in the form of the customer defrauding the lender by borrowing without intending to repay

5428-450: The agreement to the creditor. These orders may be immediate or subject to a delay, and may give the debtor the option to pay the goods value to the creditor if he does not return the goods in time. Transfer orders are orders transferring the creditor's ownership of certain goods to the debtor, ordering the payment of the rest of the goods to the creditor. This can only be done if the debtor pays an amount of money equal or more than one third of

5520-471: The agreement, the amount and rate of the total charge for credit, the protection and remedies available to him and "any other matters which, in the opinion of the secretary of state, it is desirable for him to know about in connection with the agreement". The Act allows the Director General of Fair Trading to waive certain requirements if it appears, on the application of a consumer credit business, that to enforce them would be impracticable. Section 61 lays out

5612-425: The bill were indeed extremely stringent, and caused potential problems for other businesses, but were significantly amended and now only affect the canvassing they were intended to prevent. Canvassing is defined as a situation in which an individual (the canvasser) solicits the entry of another individual (the consumer) into an agreement based on his oral representations during a visit by the canvasser to "any place" for

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5704-502: The borrower is a major component in underwriting and interest rates ( APR ) of these loans. The monthly payments of personal loans can be decreased by selecting longer payment terms, but overall interest paid increases as well. A personal loan can be obtained from banks, alternative (non-bank) lenders, online loan providers and private lenders. Loans to businesses are similar to the above but also include commercial mortgages and corporate bonds and government guaranteed loans Underwriting

5796-413: The borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in

5888-412: The cancellation of a regulated agreement and the withdrawal from a prospective regulated agreement. These are similar to those found in the Hire-Purchase Act 1965 , but cover all consumer credit and consumer hire agreements rather than the hire-purchase and instalment sale agreements previously covered. The withdrawal from a prospective agreement is found primarily at common law ; a party may withdraw from

5980-519: The cost of the loan. In September 1973, the government issued a white paper titled Reform of the Law on Consumer Credit in which they indicated they were planning to implement almost all of the Crowther Committee's consumer credit recommendations. The only real differences were an increase in the limits for financial protection from £2,000 to £5,000 (due to the drop in value of money), and stronger protection for hirers under hire-purchase agreements. The Act

6072-422: The courts to intervene for the first time, since an unregistered bill of sale was void and could not be claimed by creditors. This act was followed by the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882 , which provided limited protection for debtors. Outside of these acts, however, little was done between 1854 and 1900, and moneylenders used this to their advantage, sometimes abusively;

6164-416: The debtor of any sum owed to the creditor, remedying any breach of the agreement by the debtor other than non-payment of money or both. These orders are made at the discretion of the courts after an application for an enforcement order. The time orders can also cover statutory bailment in the case of hire-order or hire-purchase agreements. If the court feels that the property in dispute or acting as security

6256-499: The debtors who would like to sue their moneylender to have the agreement cancelled were by definition poor, and could not afford legal representation. Secondly, the Act only focused on specific types of lenders; lending by a single moneylender was covered, lending by a bank was not. In 1927 a second Moneylenders Act was passed, which required licensing as well as registration and forbade moneylenders from employing agents, canvasses or sending out unsolicited advertisements . Unfortunately

6348-413: The definition of advertisement to visual advertisements and excluded oral communications and radio broadcasts, which are included by the Act. The test of whether an oral communication counts as an "advertisement" is whether or not the communication is made for drawing attention to the advertiser's business or for answering a specific enquiry without promoting the business. In R. v Delmayne [1970] 2 QB 170

6440-432: The event of insolvency, the debt may be uncollectible. Demand loans are short-term loans that typically do not have fixed dates for repayment. Instead, demand loans carry a floating interest rate , which varies according to the prime lending rate or other defined contract terms. Demand loans can be "called" for repayment by the lending institution at any time. Demand loans may be unsecured or secured. A subsidized loan

6532-413: The formalities required for a regulated agreement. The terms must be found in a signed and legible document, a copy of the unsigned agreement must be supplied to the debtor or hirer, a copy of the signed document must be supplied to the debtor or hirer and a notice advising the debtor or hirer of his rights of cancellation must be included with the signed and unsigned copies. The "signed and legible document"

6624-433: The granting of loans. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over them; subprime mortgage-lending and payday-lending are two examples, where the moneylender is not authorized or regulated , the lender could be considered a loan shark . Usury is a different form of abuse, where the lender charges excessive interest. In different time periods and cultures,

6716-523: The hirer and buyer was not a corporation. In 1965, the Crowther Committee was established to look at the state of consumer credit law in the United Kingdom. Chaired by Lord Crowther , the Committee began sitting in December that year and eventually extended their review to cover consumer credit generally rather than just the bills of sale and moneylending they had initially been concerned with, and their report

6808-408: The hirer to make payments of more than £5,000 total and not be an "exempt agreement". "Goods" are defined as chattels personal , with "capable of subsisting" simply meaning that the agreement does not restrict the time limit of use to less than three months. The agreement does not have to exceed three months, but the option to do so must be given by one party. An "individual" (i.e., a debtor enjoying

6900-508: The lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract , which can also place the borrower under additional restrictions known as loan covenants . Although this article focuses on monetary loans, in practice, any material object might be lent. Acting as a provider of loans is one of the main activities of financial institutions such as banks and credit card companies. For other institutions, issuing of debt contracts such as bonds

6992-593: The loan. Most of the basic rules governing how loans are handled for tax purposes in the United States are codified by both Congress (the Internal Revenue Code) and the Treasury Department (Treasury Regulations – another set of rules that interpret the Internal Revenue Code). Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower

7084-442: The mortgage is paid off in full. In the case of home loans, if the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it. Similarly, a loan taken out to buy a car may be secured by the car. The duration of the loan is much shorter – often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. In

7176-406: The original bill, this did not make a significant impact, and the new administration immediately reintroduced the bill in the House of Lords . It was passed on 31 July 1974, and immediately received royal assent . The final version of the act contained 193 sections and 5 schedules, much larger than the original 96 pages. The Act as passed was divided into 12 sections, and was "designed to provide

7268-418: The original hire agreement. This is distinct from previous law, which required a written note of the agreement but allowed the agreement to be conducted orally. Certain other formalities must be observed; under Section 105, a security is not considered properly executed unless a document is signed on or on behalf of the debtor. This document must conform to certain regulations; the terms must be legible when it

7360-477: The owner or creditor did not give a copy of the agreement to the debtor or hirer before the contract commenced. Other than this the court is obliged to issue such orders. There are also situations in which orders can be made even when there has been no infringement. These are when the debtor or hirer has died, to recover protected goods without the consent of a debtor and to enforce a land mortgage. The courts can also make "time orders" providing for either payment by

7452-511: The protections of the Act) is defined so as to include unincorporated associations and small partnerships. Lending to a corporation of any sort (including a " corporation sole ") is unaffected. Registered societies are corporate bodies, but trade unions and many friendly societies are unincorporated, and thus qualify. By contrast, the definition of "person" (i.e., a creditor) includes both individuals and incorporated bodies. The definition of "agreement"

7544-451: The purpose of making such representations. Exceptions to "any place" are places where business is carried out, either permanently or temporarily, by the creditor, owner, supplier, canvasser, employer of the canvasser or the consumer. There is no requirement that the oral solicitations take place in person - they can come over the telephone, or be trying to induce another individual to convince the consumer into entering an agreement. Part V of

7636-411: The quality of pledged collateral before sanctioning the loan. Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages: The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In

7728-611: The report of the House of Commons Select Committee on Money-Lending in 1898 included testimony from one moneylender who admitted he charged 3,000% interest, while another had worked under 34 different aliases to avoid having notoriety associated with his name. As a result of this report the Moneylenders Act 1900 was passed, which required registration for moneylenders and allowed the courts to dissolve "unfair" moneylending agreements. This act had two main weaknesses, however; firstly, many of

7820-428: The securities pledged. Gold loans are issued to customers after evaluating the quantity and quality of gold in the items pledged. Corporate entities can also take out secured lending by pledging the company's assets, including the company itself. The interest rates for secured loans are usually lower than those of unsecured loans. Usually, the lending institution employs people (on a roll or on a contract basis) to evaluate

7912-454: The size of credit, secure transactions and transactions where the parties have attempted to break up a transaction into multiple smaller ones worth under £30 to avoid regulation. Small agreements are exempt from almost all of Part V of the act, although they remain controlled by Part IV. The Act is primarily aimed at commercial and professional traders, and as a result excludes non-commercial agreements. Non-commercial agreements are defined by

8004-400: The use of the money. The document evidencing the debt (e.g., a promissory note ) will normally specify, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and the date of repayment. A loan entails the reallocation of the subject asset (s) for a period of time, between the lender and the borrower . The interest provides an incentive for

8096-427: The way in which traders and companies seek business. Prior to this individual aspects had been controlled — advertisement by moneylenders had been strictly regulated since the Moneylenders Act 1927 — but no other aspects of consumer credit were regulated at all. While this was acceptable for large and respectable institutions, the evolution of less reputable trading organisations necessitated some kind of regulation, and

8188-403: The weekly journal of the Office of Fair Trading . A licence lasted for 3 years beginning with the date specified on the licence, not the date of its issue. A person who engages in activities that require a licence when he does not have one commits a criminal offence. In addition, those agreements he makes are considered unenforceable unless the Director General directly intercedes. (This function

8280-469: Was finally published in March 1971. The report discussed the economical, social and legal aspects of consumer credit, and concluded that the existing law was so confused and unsatisfactory that it was not worth amending. Instead, it recommended the complete repeal of all existing legislation and its replacement with two new acts: a Lending and Security Act, which would regulate legitimate business transactions, and

8372-535: Was first introduced to Parliament as the Consumer Credit Bill at the beginning of November 1973, and initially ran to 96 pages. It was given its second reading on 14 November, and was welcomed by both the government and opposition. By February 1974, it had passed through the Committee Stage , but its progress was cut short by a general election in the same month. Thanks to the support of the opposition to

8464-498: Was needed, and a bill to do this was introduced to Parliament. Despite its progress through Parliament being disrupted by a general election , the bill passed quickly through the legislative process thanks to support from both the government and the opposition, coming into law on 31 July 1974. The Act introduced new protection for consumers and new regulation for bodies trading in consumer credit and related industries. Such traders were required to have full licenses, originally issued by

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