Explanatory note

This Order provides for an amendment to be made to the Consumer Credit (Exempt Agreements) Order 1989.

It substitutes a new article for article 4 of that Order. Article 4 provides for the exemption of certain consumer credit agreements from regulation under the Consumer Credit Act 1974 by reference to the rate of the total charge for credit made under them. The article substituted now provides that exemption from regulation is only possible where two conditions are satisfied. The first condition is that the only charge that may be included in the total charge for credit is interest which must be charged at a rate which can never exceed the sum of one per cent and the highest of any of the base rates published by certain banks. The second condition is that the agreements are not offered to the public generally but only to a certain class or classes of person.

The Order contains a transitional provision which enables creditors whose agreements would have been exempt under article 4 as it was before this Order came into force to continue to enter into similar types of agreements provided they do so on or before 31st July 1999 and for those agreements to be exempt.

A Regulatory Appraisal of the costs and benefits that will result from this Order will be available in the libraries of the Houses of Parliament when the Order, having been made, is laid before Parliament and from the Consumer Affairs and Competition Policy Directorate, the Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET.