Article 2

Subject to article 3 below, the Consumer Credit (Exempt Agreements) Order 1989^f1 is hereby amended by the substitution, for article 4, of the following article:–

“Exemption of certain consumer credit agreements by reference to the rate of the total charge for credit.

3

(1)

The Act shall not regulate a debtor-creditor agreement–

(a)

which is an agreement of a type offered to a certain class or classes of persons and not offered to the public generally; and

(b)

under the terms of which the only charge included in the total charge for credit is interest which cannot at any time exceed the sum of one per cent and the highest of the base rates named in paragraph (2) below, being the latest rates in operation on the date 28 days before any such time.

(2)

The banks referred to in paragraph (1) above are–

• Bank of England

• Bank of Scotland

• Barclays Bank PLC

• Clydesdale Bank PLC

• Co-operative Bank Public Limited Company

• Coutts & Co

• Lloyds Bank PLC

• Midland Bank Public Limited Company

• National Westminster Bank Public Limited Company

• the Royal Bank of Scotland p.l.c.

• TSB Bank Plc.

(3)

For the purposes of sub-paragraph (1)(b) above, “interest” means interest at a rate determined in accordance with the formula set out in paragraph (1) of regulation 7 of the Consumer Credit (Total Charge for Credit) Regulations 1980^f2, and in that formula as applied by that sub-paragraph “period rate of charge” has the meaning assigned to it in paragraph (2) of that regulation.”.