Article 3

The Consumer Credit (Exempt Agreements) Order 1989^f1 is amended by substituting the following for article 4–

“4

(1)

The Act shall not regulate–

(a)

a debtor-creditor agreement where the creditor is a credit union and the rate of the total charge for credit does not exceed 12.7 per cent;

(b)

(subject to paragraph (2) below) a debtor-creditor agreement–

(i)

which is an agreement of a type offered to a particular class, or particular classes, of individuals and not offered to the public generally; and

(ii)

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 published by the banks named in paragraph (3) below, being the latest rates in operation on the date 28 days before any such time; or

(c)

(subject to paragraph (2) below) a debtor-creditor agreement–

(i)

which is an agreement of a type offered to a particular class, or particular classes, of individuals and not offered to the public generally;

(ii)

under which there can be no increase after the relevant date in the rate or amount of any item which is included in the total charge for credit or which would be included but for regulation 14 of the Total Charge for Credit Regulations; and

(iii)

in respect of which the rate of the total charge for credit does not exceed the sum of one per cent and the highest of the base rates published by the banks named in paragraph (3) below, being the latest rates in operation on the date 28 days before the date on which the agreement is made.

(2)

Paragraph (1)(b) and (c) above does not apply to an agreement under which the total amount to be repaid by the debtor to discharge his indebtedness in respect of the amount of credit provided may vary according to a formula which is specified in the agreement and which has effect by reference to movements in the level of any index or to any other factor.

(3)

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

• Bank of England

• Bank of Scotland

• Barclays Bank PLC

• Clydesdale Bank PLC

• Co-operative Bank Public Limited Company

• Coutts & Co

• Lloyds TSB Bank plc

• Midland Bank Public Limited Company

• National Westminster Bank Public Limited Company

• The Royal Bank of Scotland p.l.c.

(4)

In this article–

• “credit union” means–

  1. (a)

     a society registered under the Industrial and Provident Societies Act 1965^f2 by virtue of section 1 of the Credit Unions Act 1979^f3; or

  2. (b)

     a society registered under the Credit Unions (Northern Ireland) Order 1985^f4 or a society registered under the Industrial and Provident Societies Act (Northern Ireland) 1969^f5 as a credit union;

• “interest” means interest at a rate determined in accordance with the formula set out in regulation 7(1) of the Total Charge for Credit Regulations, and in that formula as applied by paragraph (1)(b) above;

• “period rate of charge” has the meaning given in regulation 7(2) of those Regulations;

• “the relevant date” has the meaning given in regulation 1(2) of the Total Charge for Credit Regulations; and

• “the Total Charge for Credit Regulations” means the Consumer Credit (Total Charge for Credit) Regulations 1980^f6.”.